Mr Watson met Mr Corbyn this morning, in a crucial meeting following a wave of shadow cabinet resignations, and ahead of a meeting of Labour MPs on Monday night, where a vote of no confidence in the leader will be tabled.
It is understood that Mr Watson stopped short of telling Mr Corbyn to resign, but warned that the Labour leader has lost authority within the parliamentary party.
Another wave of senior resignations from the Labour frontbench is thought to be imminent.
The meeting between Mr Corbyn and Mr Watson was described as "civil" by a spokesman for the leader. But a senior party source told the BBC Mr Corbyn was left in no doubt he had lost the support of the Parliamentary Labour Party.
It comes after a raft of senior resignations over the past 24 hours.
Mr Corbyn lost 12 members of his shadow cabinet on Sunday and further resignations have already taken place ahead of a crucial meeting of the Parliamentary Labour Party on Monday evening.
Shadow foreign minister Diana Johnson, shadow civil society minister Anna Turley and shadow defence minister Toby Perkins all resigned first thing on Monday morning as the party crisis continued.
They were followed by Stephen Kinnock, who served as a parliamentary private secretary on the business team, and Chris Matheson, a PPS on the shadow justice team.
Nevertheless Mr Corbyn has said he will fight on and challenged the party rebels to put up a candidate to stand against him.
Previous polls suggest Mr Corbyn has strong support amongst Labour members, who would have to be convinced of his departure in any ensuing leadership contest.
The plotters however point to polls suggesting that Labour voters at large – a wider category – have lost faith in his leadership.
Mr Corbyn has since "refreshed" his shadow Cabinet in an attempt to stabilise his position.
Emily Thornberry will take over the position of shadow foreign secretary to replace Hilary Benn, whose sacking triggered the rebellion of moderate Labour MPs.
Diane Abbott takes the post of shadow health secretary while Pat Glass is shadow education secretary.
Middlesbrough MP Andy McDonald steps into the shadow transport secretary role while former soldier Clive Lewis becomes shadow defence secretary.
Other appointments include Rebecca Long-Bailey, Kate Osamor, Rachel Maskell, Cat Smith, and Dave Anderson.
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