In a skillet on low heat, begin to melt the cream cheese. Once the cream cheese has begun to melt, add the chili, stir frequently. Increase the heat to medium. Once the cream cheese has melted into the chili add the diced tomatoes and green chilies. Mix well. By the handful add the cheddar. Stir constantly and continue to add the cheese. Once the cheese has been incorporated into the dip, begin to add the milk, a couple tablespoons at a time until it has reached the desired consistency. Serve with chips. Enjoy!