In a large saucepan, bring potatoes to a boil. Reduce heat; cover and simmer for 10-15 minutes or until tender.
In a small saucepan, melt butter. Stir in flour until smooth; gradually add the broth and milk. Bring to a boil; cook and stir for 2 minutes or until thickened.
Stir into potatoes. Add salt and pepper. Cook over medium heat for 5 minutes or until heated through.