How to Make It
Preheat the oven to 350°. Spread the bread squares on a baking sheet and toast for about 10 minutes, until golden.
Meanwhile, melt the butter in a large skillet. Add the onions, cover and cook over moderate heat, stirring, until softened, about 5 minutes. Reduce the heat to moderately low and cook uncovered until the onions are deeply golden, 30 minutes. Stir in 2 to 3 tablespoons of water a few times during cooking to deglaze the pan.
Add the toasted bread, milk and the 1 1/2 cups of water to the skillet and bring to a boil, scraping up any browned bits. Simmer over very low heat just until the bread is very soft, about 5 minutes. Transfer the soup to a blender and puree until smooth.
Transfer the soup to a saucepan and bring to a simmer. Season with salt and pepper and pour into bowls. Garnish with crème fraîche and chives and serve.