LINE 8-inch square pan with foil, with ends of foil extending over sides. Microwave chocolate, butter and water in large microwaveable bowl on HIGH 2 min. or until butter is melted; stir until chocolate is completely melted. Add dry pudding mix; stir with whisk 2 min.
ADD powdered sugar, 1 cup at a time, stirring after each addition until blended. Stir in 1/4 cup sprinkles; press onto bottom of prepared pan. Top with remaining sprinkles.
REFRIGERATE 2 hours or until firm.
Store cut-up fudge between sheets of waxed paper in airtight container in refrigerator up to 2 weeks.