"I want to add my experience to the Watford squad and I'm hoping that some of my natural leadership skills can benefit the group here," the former Millwall, Blackburn Rovers, West Ham United and Everton fullback told watfordfc.com.
"I'm highly motivated to keep playing. There's still a huge passion within me for football," added Neill who captained Australia in their last game in November against Costa Rica.
He is hoping to play at his third World Cup at this year's tournament with Australia having been drawn in Group B alongside holders Spain, 2010 runners-up the Netherlands and Chile.
Watford, who sit 12th in the second-tier Championship, host Blackpool on Saturday.
(Reporting by Tom Hayward; editing by Robert Woodward and Ken Ferris)
