It gives him the chance of equalling Van Nistelrooy's mark in his next match at Newcastle United and opens up the possibility of him breaking the record against the Dutchman's former club Manchester United at the end of the month.
Vardy's feat, which helped his unsung side join Manchester City and Arsenal on 25 points at the top of the table, has led to plenty of plaudits for the all-action striker.
"What a run he's on - magnificent, isn't it?" former England striker Alan Shearer enthused on BBC radio.
Delighted Leicester manager Claudio Ranieri was also left thrilled by Vardy's remarkable form which saw him fire in his 12th goal of the league campaign on Saturday.
Watford's accident-prone keeper Heurelho Gomes brought down Vardy to concede the spot kick soon after letting N'golo Kante's weak shot slip through his grasp for Leicester's first goal.
For a moment, team mate Riyad Mahrez was about to take the penalty but, as the crowd hollered for Vardy to be given the chance, evidently thought better of going for goal himself.
Mahrez handed the ball over magnanimously to the man of the moment, who crashed the ball straight down the middle into the roof of the net to the delight of the supporters.
It made 28-year-old Vardy, staking an ever more convincing claim for a regular England starting role, the first player to score in nine straight Premier League games in the same season, as Van Nistelrooy's goals came between March and August 2003.
"Ruud van Nistelrooy was a fantastic striker and, like him, Jamie has everything to achieve at the highest level," Ranieri said.
(Writing by Ian Chadband; Editing by Ken Ferris)
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