The Crystal Palace midfielder wants to return to Vicarage Road.
According to a report from L’Expression in his native Algeria the midfielder the 29-year-old, who has been told he can leave Palace this summer, has rejected moves to both Queens Park Rangers and Bristol City in order to hold out for Watford.
Now he wants to make the move permanent.
The report claims that QPR and Bristol City both met the Palace asking price of around £2 million, which Watford are unwilling to match.
Guedioura became a popular player at Vicarage Road last season, featuring in 17 Championship games scoring twice.
The Algerian international, who has 32 caps for his country, played a handful of times for Palace last term and has never settled at the club since his arrival from Nottingham Forest in 2013. With the arrival of Yohan Cabaye his chances of playing for the club diminished even more.
Watford however will have to stump up the cash if Guedioura is going to get the move he wants.