With the blessing of his family, the Premier League club are moving forward with two tributes to Taylor.
A statue of the club's greatest manager will be commissioned and sited at the ground, with the location to be agreed with his family and Watford Borough Council.
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Watford have also confirmed a pre-season tribute fixture, which is expected to become an annual event, will be arranged to take place at Vicarage Road ahead of the Hornets’ 2017/18 campaign.
Watford will engage with fans’ representatives to ensure supporters play a lead role, alongside the club, in bringing the statue to life. This has been supported by Taylor’s family, who have also written this open letter.
The club’s most successful manager passed away last month at the age of 72. Taylor led the Hornets from the Fourth Division to runners-up in the old First Division, into Europe and the 1984 FA Cup Final.
The former England manager also guided them to back-to-promotions, in his second spell, as they returned to the top-flight.
Taylor became chairman in 2009 and Watford renamed the Rous Stand after him three years ago.
His funeral was held at the start of this month with hundreds of fans and figures from the football world paying their respects to the legendary manager.