Heat butter in saucepan over medium heat.
Add onions and garlic, sauté until golden.
Stir in flour, cook one minute.
Slowly add milk, whisk continuously.
Add chili powder, cumin, paprika, salt, pepper.
Stir until mixture slightly thickens.
Lower heat and add shredded cheese.
Stir until cheese melts smoothly.
Add diced green chilies, stir gently.
Remove from heat and serve warm.