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Preheat oven to 350 degrees F. Spray a 2-quart baking dish with cooking spray and set aside.
In a large bowl, combine ground beef, uncooked rice, egg, onion, parsley, salt and pepper. Shape into 1-inch balls.
Place the meatballs in the prepared baking dish.
In a small bowl, whisk together tomato soup and water. Pour soup mixture over the meatballs.
Cover and bake for 30 minutes. Remove cover and continue baking for 30 more minutes. At this point, the meatballs should be cooked through and the rice inside the meatballs should be tender. If the rice is still crunchy, cover loosely with foil and return to the oven for another 5-10 minutes (or until rice is done).