Cook 1 cup sugar, water and 1 Tbsp. vanilla in saucepan on medium heat 8 min. or until mixture is golden brown and of syrup-like consistency, carefully swirling pan every few minutes. (Do not stir.)
Pour into 9-inch round pan.
Blend milk and cream cheese in blender until smooth.
Add eggs, and remaining sugar and vanilla; blend well.
Pour over syrup in pan; place filled pan in larger pan.
Add enough water to larger pan to come halfway up side of filled pan.
Bake 1 hour or until knife inserted in center comes out clean.
Remove flan from water-filled pan; cool completely. Refrigerate 4 hours. Loosen flan from side of pan just before serving; unmold onto plate.