Set your oven to preheat at 350°F (175°C).
Place a large skillet over medium heat and cook the ground beef along with the diced onion, stirring occasionally, until the meat is fully browned and the onion is softened. Drain off any excess fat.
Sprinkle the taco seasoning over the meat mixture, then pour in the water. Stir well and allow it to simmer for 2 to 3 minutes until it slightly thickens.
Incorporate the undrained chili beans and the can of diced tomatoes with green chilies into the skillet. Stir thoroughly and simmer for another 2 to 3 minutes.
In a 9x13 inch baking dish, form a bottom layer with half of the crushed chips. Evenly spread the seasoned meat and bean mixture over this chip layer. Sprinkle the shredded cheddar cheese over the top to form a generous cheese layer.
Transfer the dish to the oven and bake uncovered for 15 to 20 minutes, or until the cheese is thoroughly melted and bubbling around the edges.
Once out of the oven, scatter the remaining crushed chips across the top. Add any desired garnishes such as sour cream, lettuce, diced tomato, green onions, or fresh cilantro before serving.