The Hornets opted to sack Claudio Ranieri earlier today following a series of poor results which has left the club with real relegation worries.
They are set to turn to organisation-specialist Hodgson, who left his job as Crystal Palace manager at the end of last season.
There is still work to do on the deal, but it is claimed that the former England manager could be confirmed in the role at Vicarage Road as early as Tuesday.
Hodgson is claimed to believe that there is enough firepower in the Watford squad for him to keep them in the division.
If he takes the job then Hodgson’s first task will be an away encounter against top four chasing West Ham United, followed by a visit from Brighton & Hove Albion.
Watford have slumped to second from bottom in the Premier League table and are two points from safety.
They do though have games in hand on a number of sides above them in the league standings.