Adam Thompson has completed his move to Southend United and the Watford Observer understands the Hornets allowed the player to leave on a free transfer.
Thompson only had six months left on his Watford contract and was surplus to requirements at the Championship club.
The 21-year-old has made 11 appearances for The Shrimpers since he joined the club on loan at the start of the season.
Saturday's 4-1 victory over Millwall was the last game of Thompson's Southend loan but after the match manager Phil Brown confirmed the clubs had spoken about the defender joining permanently.
Thompson broke into the Watford team as a 17-year-old under Malky Mackay whilst still a second-year scholar.
He made 11 appearances for the Hornets during the second half of the 2010/11 season before spending most of the following campaign at Brentford during two spells, when he made 22 outings.
Thompson began last season at Watford, starting in the League Cup defeat to Bradford City, before an unsuccessful two-match stint at Wycombe Wanderers, who sacked Gary Waddock during the Hornets academy graduate's stay at Adams Park.
Two more Watford run-outs followed before injury ended a loan spell at League Two Barnet after just one appearance.
Gianfranco Zola gave Thompson another two substitute outings before the end of last season but the young defender was not given a squad number in the summer.