Is your entire cage covered with bedding? That could be confusing to him. Once I removed all of the bedding from my rabbit's cage except for his litter box he started using his litter box religiously. The rest of his cage is just bare plastic. He has a fleece lined play pen and he never has accidents. (My female is another story though, none of these tricks have worked for her.)
If he really does prefer that his food and water dish be located in his litter box then you can buy dishes that mount to the cage bars. They may still get litter in them but they won't get spilled.