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Combine all the ingredients in a medium saucepan. Bring to a boil, and then reduce the heat to medium and simmer for about 15 minutes, stirring occasionally until thickened and crushing some of the blueberries with the back of the spoon. Refrigerate the preserves while the dough rises.
Whisk together flour, 1/3 cup of sugar and salt in a bowl. Warm milk in the microwave for about 45 seconds or until a thermometer reads 100 to 110 degrees. Add the milk and 1 tsp sugar to the bowl of a stand mixer fit with a dough hook. Sprinkle the yeast over the milk and stir to combine. Let stand for about 5 minutes until the yeast starts to foam.
Add eggs, vanilla, flour, sugar and salt to the yeast mixture. Mix on low speed until combined and then increase speed to medium and mix for about 5 minutes until the dough is smooth.
Add the softened butter gradually and mix on medium about 4 minutes until butter is incorporated and dough comes together but is sticky. Scrape down the sides of the bowl as needed during mixing.
Cover the bowl with plastic wrap and let rise in a warm place for 1 to 1 1/2 hours until the dough is about doubled (or let rise in the refrigerator overnight). Punch down the dough and scrape out onto a lightly floured surface. Divide the dough into 2 halves and shape into a rectangle.
Starting with one disc, roll the dough out on a floured surface to a 12 x 16 rectangle. Spread with half the cream cheese mixture leaving a small border on one long edge. Then spread with half the blueberry preserves again leaving a border on a long edge.
Starting with the long side without the border, roll the dough into a tight log. If the dough is very warm or sticky, you can refrigerate the dough for about 30 minutes to make it easier to work with (if you didn't refrigerate overnight).
Trim off about an inch from each side. Slice the dough down the middle lengthwise into 2 long halves with the layers exposed. Place the end of one of the halves over the top of the other half, pressing together lightly (see pictures above) and then braid the 2 pieces over one another to the bottom, again pressing together lightly. Repeat the last 2 steps with the other dough disc.
Line two, 9 x 5 loaf pans with parchment paper leaving an overhang on the long sides. Carefully place the braided dough into each loaf pan, squeezing the ends slightly to fit if needed. Cover with plastic wrap and let rise in a warm place for an hour.
Bake at 350 degrees for about 40 minutes or until golden brown and a tester comes out clean. Immediately after taking out of the oven, brush each loaf with half the sugar syrup, using it all.
Cool a few minutes in the loaf pan and then transfer the babka using the parchment paper to a wire rack to cool completely.
Combine the cream cheese and sugar in a bowl and beat using an electric mixer until combined.
Combine the sugar and water in a small saucepan and stir, cooking on medium high until the sugar is dissolved. Set aside to cool.