Scrub potatoes; cut any large potatoes in half. Peel a narrow strip from around the center of each whole potato. In a medium saucepan cook potatoes, covered, in a small amount of boiling salted water for 8 minutes. Add fresh peas and cook for 10 to 12 minutes more or until tender. (If using frozen peas, cook potatoes 14 minutes; add peas and cook 4 to 5 minutes more.) Drain; return vegetables to saucepan.
Meanwhile, in a small saucepan cook onion in hot butter until tender. Stir in flour, salt, and pepper. Add milk all at once. Cook and stir until thickened and bubbly. Cook and stir 1 minute more. Stir into potatoes and peas; heat through. Season to taste. If desired, sprinkle with chives. Makes 4 servings.