Watkins is expected to leave Brentford in the ongoing transfer window after the London club failed to earn promotion to the Premier League this season.
The 24-year-old scored 25 goals in the Championship and it has led to interest from several clubs in the Premier League this summer.
Crystal Palace and Sheffield United are interested in the striker, but Aston Villa, who also want him, have an edge in the race to sign Watkins.
Watkins enjoyed playing under Smith at Brentford previously and is keen to reunite with his former manager again.
The Aston Villa manager is giving the Midlands club an advantage as the player would prefer a move to Villa Park.
Smith wants to strengthen his forward line this summer and Watkins is a player he is keen on signing ahead of the new season.
Brentford are aware of Watkins’ being a man in demand and are looking to make it count by slapping a £25m asking price on his head.