Preheat oven to 375 degrees F.
Cook sausage in a non-stick skillet over medium-high heat until browned, stirring to crumble. Drain and set aside.
Combine milk and water in a saucepan; bring to a boil over medium-high heat. Stir in grits; cover, reduce heat and simmer 7 minutes or until thickened, stirring frequently. Combine grits mixture, sausage, cheese, parsley, salt, garlic, and peppers in a large bowl; set aside.
Beat egg whites at high speed of a mixer until stiff peaks form. Gently stir 1/4 of the egg whites into grits mixture; gently fold in remaining egg whites. Spoon mixture into a 1 1/2-quart casserole coated with cooking spray. Bake for 25 minutes or until set and lightly browned.
Coat a medium nonstick skillet with cooking spray and place over medium-high heat until hot. Add bell pepper, and saute 4 minutes or until tender; serve warm with grits.