Melt the butter in a large saucepan and add the onion. Cover the pan and cook over low heat until the onion is softened but not browned. Add the potato and chicken stock and simmer for 12 minutes, or until the potato is tender. Add the watercress and cook for 1 minute.
Allow to cool alittle before puréeing until smooth in a blender or food processor. Return to the clean saucepan.
Bring the soup gently back to the boil and stir in the cream and milk. Season with nutmeg, salt and pepper and reheat without boiling. Serve garnished with a few small watercress leaves.