Place the butter, beef, onions and peppers in a large skillet over medium high heat on the stove. Cook until the meat is browned and the vegetables have begun to soften. Drain any excess fat.
Mix the chopped tomatoes, minced garlic and oregano into the meat mixture and saute another 30 seconds.
Layer ½ of the cooked spaghetti in the bottom of a well greased 9x13 baking dish.
Place half of the meat mixture on top of the spaghetti, followed by half of the mozzarella cheese.
Repeat the layers with the rest of the spaghetti, then meat mixture and finally the mozzarella cheese.
Mix together the mushroom soup and water, and pour over the casserole.