Terry Westley's side progressed to the last four of the competition with a 1-0 win against The Hornet's Under 18's side in front of more than 2,000 fans at St Andrews on Monday evening.
Luke Hubbins scored the only goal of the game for Blues just four minutes from the end of normal time.
Blues: Dean Lyness, Jack Rutter, Shaun Timmins, Mitchell McPike, Jacob Rowe, Dan Preston, Luke Hubbins, Ashley Sammons, Robert Gradwell (Will Packwood), Jake Jervis, Jamie Sheldon (Jacob Hronec). Subs not used: Jack Butland, Omar Bogle, Shane Williams
Watford: Jonathan North, Lee Hodson, Louis Lavers, Kurtney Brooks, Robert Kiernan, Eddie Oshodi, Matthew Whichelow (Gavin Massey), Cole Penny (Jack Warburton 67), Marvin Sordell, Chez Isaac (Andy Yiadom), Piero Mingoia. Subs not used: Bo Antal, Theo Angus.
Attendance: 2,404