Sauce:

2 tbsp. olive oil
1 c. chopped onions
1/2 c. chopped green pepper
2 cloves garlic
2 (12 oz.) cans tomato paste
6 c. water
4 tsp. salt
1/2 tsp. pepper
4 tsp. chili powder
1/2 tsp. oregano

Meatballs:

1 c. milk
1 egg
1 c. soft breadcrumbs
1/2 c. chopped parsley
1 clove garlic, minced
2 tsp. salt
1/4 tsp. pepper
1/2 tsp. oregano

Heat olive oil in large Dutch oven or frying pan. Add onion, green pepper and garlic; cook slowly until onion is transparent. Blend in remaining sauce ingredients. Cover and simmer gently over very low heat for 30 minutes.

While sauce is cooking, prepare meatballs. Combine all meatball ingredients and mix well. Shape meat mixture into balls (the size you prefer). Spray baking sheet; brown meatballs in a 350°F oven for 15 to 20 minutes, until they are brown. Add meatballs to sauce and cook another 30 minutes.