The 29 year old midfielder is out of contract in the summer and has been allowed to spend the rest of the season with Watford.
The motivation behind allowing Watson to leave on a free transfer would appear to be the short term saving of his wages with the former Crystal Palace believed to be one of the higher earners in the squad.
Speaking of the transfer Malky Mackay told the club's official website: “When the move was first discussed Ben felt it would be something he would be interested in and the opportunity to move back near his family is important to him.
"We respect that, wish him all the best and thank him very much for what he has done at this club, but it’s time to move on.”
Watson's departure is the latest in the January exodus from the DW Stadium with Roger Espinoza and Oriol Reira having already left and Shaun Maloney and Callum McManaman also expected to leave before the end of the month.