Vicarage Road is also home to Saracens rugby club

The Hornets' home since 1922 will have its capacity boosted to between 22,000 and 23,000, with a new East Stand the centrepiece of the expansion.

Watford chairman Graham Simpson said: "This is a momentous announcement in the history of Watford Football Club.

"I have always said in order for this club to survive long term we need a sustainable business."

He added: "Vicarage Road has been our home since 1922 and we love it here in the heart of the community."

There was always the temptation to relocate but we are a town-centre club at the heart of our community Watford chief executive Mark Ashton

The Hornets hope to gain planning permission for the project next March, which would allow them to begin work as soon as the season ends in May.

Watford chief executive Mark Ashton admitted the club had considered moving from their home of 84 years.

"There was always the temptation to relocate," said Ashton. "But we are a town-centre club at the heart of our community.

"The problem with many football clubs is that they tend to build new stadia which are isolated from the towns and cities they serve."

Watford plan to fund the project in partnership with housing association Origin.

They are to contribute �19m to the initiative, which will see 180 homes built near Vicarage Road for doctors and nurses who work at the nearby Watford General Hospital.

Watford Football Club are to contribute �13.5m, of which Origin will guarantee a further �4m, with �3m coming from the revenue Watford expect to make during the next three years.