Preheat oven to 325 F if using a glass dish or 350 F if using a metal dish. Grease the 8 inch square dish.In a medium bowl, beat the butter until creamy. Beat in the sugar.
Add the flour and stir until well mixed. Press into bottom of pan and bake on center rack for 25 minutes or until the edges are just slightly golden.
Let cool completely.In a medium bowl, beat the cream cheese and 1/2 cup sugar with a handheld mixer until smooth and well blended.
Spread evenly over the cooled crust.Wipe out the bowl and add the pudding mix and milk. With the mixer on low speed, beat for about 3 minutes or until slightly thickened.
Pour over the cream cheese layer. Chill until set, then spread whipped topping over the top.