The 18-year-old Blues midfielder, who was three weeks into an initial one month loan deal with the Hornets, will now remain on loan at Vicarage Road until January.
"We're delighted to have agreed an extension with both Birmingham and Jordon," Watford manager Malky Mackay told his club's official website.
"He was keen to stay and gain valuable Championship experience.
"We feel he has the potential to be a top young talent so it's great to have him here for longer."