1. In a pan melt butter on medium heat, then add the flour and stir well and cook for few minutes or till it begins to change color to pale yellowish.
2. Pour the milk slowly while stirring continuously to avoid lumps. Bring it to boil and add the cream cheese and stir well till incorporated.
3. Add the cheddar cheese slowly while stirring after each addition and cook till it melts fully while stirring frequently. Once the cheese melts and the mixture turns smooth, turn off the heat.
4. Season with the Tabasco sauce. salt, sugar (if using), pepper and mustard and mix well till combined. Let it cool.
5. Serve the sauce as dip or spread on any recipe as desired or store it in the fridge.
If the sauce is too thick then more milk or cream can be added and reheated till desired consistency is achieved.