In a large bowl, combine flour and sugar. Using a pastry blender, cut in butter and cream cheese till mixture clings together (butter should remain in large pieces). Form into a ball. Turn dough out onto a floured pastry cloth.
With floured hands, gently knead dough for eight strokes. Using a well-floured rolling pin, roll dough into a 12x10-inch rectangle. Fold dough crosswise into thirds to form a 10x4-inch rectangle. Give the dough a quarter turn and roll into a 12x10-inch rectangle. Fold, roll and fold one more time. Wrap dough in plastic wrap; chill in the freezer for 20 to 30 minutes or till dough is firm but not stiff.
Grease a large cookie sheet; set aside. On the floured cloth, roll dough into a 12x12-inch square. Using a pastry wheel or sharp knife, cut vertical parallel lines 2 inches apart. Then cut horizontal lines 2 inches apart, forming 2x2-inch squares. Place 1-inch apart on prepared cookie sheet. Press an indentation into each square; spoon about 1/4 teaspoon jam into each indentation.
Bake in a 400 degree F oven about 15 minutes or till edges are golden. Transfer cookies to a wire rack and let cool. If you like, spoon in a little additional jam. Makes 36 cookies.