Few would dispute that Watford are only rubbing shoulders with such esteemed sides as Chelsea because of the inspirational touch of manager Graham Taylor.

The former-England coach, who celebrated his 55th birthday this week, had always promised his wife he would retire once he reached that age landmark. So how does he celebrate? By signing a new three-year contract at Vicarage Road, of course.

After this result, Mrs Taylor had better put away the cruise brochures - or at very least forget about her man accompanying her on any round-the-world trip. Who needs to when sitting on top of the world?

Which is how Taylor must feel right now having seen Allan Smart again become the top-flight toast of the red and yellow Hertfordshire hoardes. For Chelsea, it was a painful lesson that, while European nights under the lights at Stamford Bridge are to be treasured there won't be too many unless last very long if they do not stay focused during afternoons at tight grounds amid the suburbs.

Blues manager Gianluca Vialli will, at least, have assuaged the xenophobes within the media and on the terraces with the introduction of three Englishmen, Chris Sutton, Graeme Le Saux and Jody Morris - two more than were present against AC Milan on Wednesday.

Whether the incoming Anglos remain in the starting line up next time around is highly improbable after this dreadful defeat had Chelsea slumping from second to fifth in the table, and allowed those others slipping up around them not to regret it quite so much.

Chances were at a premium in the opening exchanges, although Watford looked anything but overawed. New 900,000 record-signing Nordin Wooter made his debut, the Dutchman showing some promising touches even if fellow countryman Eddie De Goey was rarely troubled in the Chelsea goal.

Despite Gallic Didier Deschamps' industry in midfield, Chelsea made little little headway, and it was the home side who should have taken the lead in the 26th minute.

Micah Hyde delivered a perfect cross which caught out the Chelsea defence but Smart, making only his second start this season, headed tamely wide from six yards.

Chelsea's best chance of an otherwise quiet half came in the 40th minute from a Bjarne Goldbaek volley which flew straight into the arms of Watford goalkeeper Alec Chamberlain. The Dane was again guilty moments later after good work by Tore Andre Flo have given him another opportunity.

Watfrod stepped up a gear after the interval and the self-belief that they might actually beat the side described by the boss beforehand as 'better than England' was visibly growing with every passing minute.

Smart and Steve Palmer both went close early in the half before the breakthrough finally came. Chelsea's Italian debutant Gabriele Ambrosetti wasted possession in midfield, Wooter taking full advantage found Paul Robinson, who fed Smart - and the Wembley play-off final hero drilled the ball in from 16 yards.

It was only the third goal that Chelsea have conceded this season, but few would contest it was thoroughly warranted regards Watford's endeavours.

The Chelsea bench was becoming increasingly animated - and rested Italian Gianfranco Zola and Romanian Dan Petrescu came on for Goldbaek and Tore Andre Flo, but the Chelsea attacks continued to flounder against the immense presence of the Watford centre-halves, with Mark Williams, former-Chesterfield man, outstanding.

On the whistle, Vialli and his team trooped sullenly to the sanctuary of their changing-room, while Taylor's heroes went on a lap of honour to tumultuous acclaim.

Whatever Graham Taylor's new contract is worth, let's hope he remebered a decent win bonus clause - he and men deserve one.

Watford: Chamberlain, Gibbs, Page, Williams, Robinson, Hyde, Easton, Palmer, Kennedy, Wooter (Wright 65), Smart (Mooney 80), Mooney (Ngonge 86).
Subs Not Used: Day, Bonnot.
Booked: Hyde, Page.
Goals: Smart 57.

Chelsea: De Goey, Ferrer, Hogh, Desailly, Le Saux, Goldbaek (Petrescu 61), Morris, Deschamps, Ambrosetti, Flo (Zola 61), Sutton.
Subs Not Used: Lambourde, Cudicini, Wolleaston.
Booked: Le Saux, Sutton.

Att: 21,244