Tamas Priskin equalised in the 75th minute, but it wasn't enough to keep the Hornets up after winning just four Premiership matches out of the 35 they have played so far, with this defeat being their 20th of the season.
Although wins were few and far between for Watford, they have never been short of passion this season and have held their own against clubs with far bigger budgets, making a yo-yo promotion next season a high possibility.
Watford were quick to take the game to Man City side as they faced their last opportunity to retain their top-flight status.
Gavin Mahon had an excellent chance to give the Hornets an ideal start after City goalkeeper Andreas Isaksson feebly punched Hameur Bouazza's corner to the central midfielder, but he seemed startled by the chance and could only push his header wide.
Hornets striker Marlon King was making his first start since October after recovering from a knee injury, but the he was understandably rusty early on and headed wide after Bouazza nodded on Foster's long clearance.
Isaksson looked far from convincing between the Man City sticks and Watford, sensing a weakness, bombarded the penalty area throughout the first half.
Bouazza has been Watford's main goal threat this season but the Algeria striker was left red-faced when he blasted wastefully over being picked out by Douglas Rinaldi.
City, who have reached Premiership safety themselves, had little to play for as their season drifts into a conclusion of mid-table mediocrity, punctuated by their contentedness to stroll through the first half.
Second half goals
However Ian Pearce's side didn't have to wait long for a goal after the break as Foster, on-loan from Manchester United, miscued a pass intended for Chris Powell to Vassell, with the City striker looping his shot back into the net from 20 metres.
Priskin came on for Steve Kabba with the Hungarian making an instant impact in the 75th minute after Rinaldi's pass released the striker who steered his shot past Isaksson to give Watford a glimmer of hope.
King almost postponed the last rites of Watford's season but he was just unable to convert at the far post after Danny Shittu had flicked on Bouazza's cross late in the match.
Five sides are still battling to avoid the two other relegation spots with West Ham, Charlton, Sheffield United, Wigan and Fulham all still in range of the drop zone with nine competition points left on offer for each team.