In a large frypan or medium stock pot, brown the beef and onion over medium heat. Drain fat. Add rice, water, diced tomatoes and stewed tomatoes. Season with salt and pepper. Simmer until rice is tender. Preheat oven to 170 degrees C.
Cut the tops off the capsicums and clean out the seeds and membrane. (Note: You may have to slightly slice the bottom of the peppers to make them stand up.) Fill capsicums with meat mixture.
Place in a casserole dish and bake in a preheated oven for 20 minutes or until capsicums are as tender as you like. Served topped with spaghetti sauce.