Place cream cheese in a stand mixer and beat until light and fluffy, 2 minutes. Add in powdered sugar a little at a time until fully mixed. Scrap down sides of bowl as needed.
Melt white chocolate to the directions on the back of the bag. Add to cream cheese mixture slowly. Add in vanilla. Fold in 1/2 Cup Skittles.
Pour fudge into a 9x9 container lined with plastic wrap, parchment or wax paper, smoothing out the top. Add the rest of the Skittles to the top and gently press in. Add sprinkles, optional. Refrigerate for 4 hours or until completely set, cut into small bite sized pieces and enjoy! Keep refrigerated.