The MP for West Bromwich East was Parliamentary Secretary at the Cabinet Office and was one of the Labour Party's digital strategists.
He established the Power of Information Task Force and has blogged for five years, advocating the use of digital technology to open up the democratic process and usher in a forum of rapid constitutional renewal.
He did not use his letter as a platform to beat Prime Minister Gordon Brown, of whom he is a close ally, but cited family reasons. He wrote on Twitter: "I promised, Twitter friends, you'd get it first."
"As I told you some time ago, though, I feel that the time has come, at the reshuffle, for me to return to the backbenches and to my constituency.
"The pressure on my young family has been painful and I do not want to ask them to endure it any longer.
"I would still like to make a contribution as a campaigner, helping you to lead Labour into the next general election, which I know we both believe Labour can and must win.
"We both came into politics for the same reasons -- a passionate belief in decency, justice and fairness for ordinary people and an equally certain conviction that only Labour has the courage and the competence to make it happen."
Watson was elected to Parliament in June 2001 and has held a number of roles in government. Most recently he has become embroiled in the MP expenses scandal and it was reported he used the parliamentary allowance to furnish a shared London flat -- although his expenses were nowhere near as extravagant as some.