Blanch mushrooms in a saucepan with boiling water for 2 minutes. Drain mushrooms and reserve water.
Melt butter in a skillet and stir in mushrooms and green pepper; cook for 4 - 5 minutes. Remove from the heat.
Stir in flour, salt and pepper . Return to the stove and cook, stirring, over low heat until mixture simmers. Remove from the heat and stir in chicken stock and milk.
If mixture is too thick add enough liquid reserved from the mushrooms and mix. Correct seasonings.
Add chicken and chopped red pepper and mix.
Serve hot, sprinkle over with chopped parsley and serve with pasta, toasts or cooked white rice.