City, who face Chelsea at Stamford Bridge on Saturday evening, extended their unbeaten run after Leroy Sane and Mahrez struck either side of half-time at Vicarage Road.
But the champions were given a fright in the concluding stages when Abdoulaye Doucoure bundled over from close range with just five minutes remaining.
Despite facing a nervous end as Watford went in search of what, for most of the match seemed an unlikely point, Pep Guardiola’s side held firm to claim their seventh consecutive league victory.
The City squad will now be given Thursday off ahead of their trip to west London this coming weekend, yet despite their healthy advantage, Mahrez believes Chelsea, Arsenal and Tottenham, as well as their closest rivals, Liverpool, remain in title contention.
“Anyone in the top four can still win the league,” said Mahrez. “Nothing is done and we need to keep working very hard for each other and try to win every game.
“Now we need to focus every three days, and we need to be ready and at our top.
“You are not going to win every game 4-0 or 5-0, and going through these types of games makes you stronger.
“We created more chances and tried to kill the game but in football when you are 2-0 up and the opposition scores, the crowd get behind them and it’s difficult, so we were very happy to win and get the three points.”
City took a one-goal advantage into the interval following a dominant opening period. It could have been more, but for the heroics of Watford goalkeeper Ben Foster, who pulled off a string of fine saves.
Never an easy game against a top team. But we showed strong fight until the final whistle! Thank you for the support 🐝 pic.twitter.com/BxYzZuXUlT— Gerard Deulofeu (@gerardeulofeu) 5 December 2018
The Hornets have now lost four of their last five matches, but Foster believes they will take confidence from their fightback against the league leaders.
“I am proud of the team,” Foster said. “When you play against City it is always very easy to go a couple down, and then heads can drop and the floodgates can open.
“But we kept going, kept plugging away, we got the goal and then towards the end they are clinging on for it. There are not many teams that can say they ran Man City that close this season.
“That is tribute to our lads, and we will take that into the next few games, now knowing we can compete with these sorts of teams at this level.
“Everton on Monday is a tough one, but we will take a lot of confidence with us.”
Highly-rated Austrian manager Ralph Hasenhuttl has succeeded Mark Hughes as Southampton manager.
Hasenhuttl will be the first Austrian to manage in the Premier League. Austria will be the 24th nation represented among Premier League managers and the 10th to be represented by just a single manager.
Here, we look at the 51-year-old’s background.
A striker of international pedigree
Hasenhuttl moved from hometown club Grazer AK to make his true mark with Austria Vienna, winning three consecutive titles in the Austrian Bundesliga from 1991 to 1993. The forward scored three times across eight Austria caps, but could never force his way ahead of Toni Polster in the pecking order.
Launched his managerial career in Germany
After spells with Cologne and Bayern Munich’s second team, Hasenhuttl retired from his playing career to move straight into coaching. And he stayed in Germany, moving from youth-team coach to manager at Unterhaching. In his only full season at the helm he just fell shy of securing a play-off place in Germany’s third tier.
Cemented his growing reputation at RB Leipzig
In two years in charge at the Red Bull club, Hasenhuttl secured a second-place finish in the Bundesliga, with the club performing better than a clutch of established outfits. It was here that Hasenhuttl’s progressive playing style came to the fore.
Southampton view Hasenhuttl in the Pochettino mould
Southampton had banked on Mark Hughes succeeding at St Mary’s owing to his wealth of Premier League experience. But just one win in 14 matches this season forced the board to dismiss the former Wales striker.
Appointing Hasenhuttl would represent a return to the calculated-gamble approach of drafting in a progressive foreign coach yet to test their methods in the Premier League. This worked wonders with Mauricio Pochettino, now soaring with Tottenham, while the blueprint failed with another former boss, Mauricio Pellegrino.
The no-nonsense Austrian will drill his players
Hasenhuttl adopts a high-pressing system, which will put the onus on hard graft and top fitness levels at St Mary’s. Saints can expect nothing but work in matches and training.
The 51-year-old Austrian, who succeeds Mark Hughes, has agreed a two-and-a-half-year deal and will take charge on Thursday.
The Saints parted company with Hughes on Monday having won only one of their 14 Premier League games this season and lying 18th in the table.
Former RB Leipzig coach Hasenhuttl was available after ending his impressive spell with the German club in the summer. He previously coached at Unterhaching, Aalen and Ingolstadt.
Southampton chairman Ralph Krueger said: “The urgency to find a path back to our potential and to the results that we expect cannot be underestimated.
“For that reason, we are extremely pleased that Ralph Hasenhuttl has agreed to become our new manager and do all he can to help guide us back on that path.
“This manager change offers us a fresh start and, very quickly, Ralph emerged as our ideal candidate.
“As a coach, he embodies the passion, structure, communication skill set, work ethic and appetite for growth that we strive for in our Southampton Way. The quick, smooth and seamless negotiation process underlines the character of the person that he is.
“We have been aware of Ralph since his days at FC Ingolstadt, where he showed the qualities that we believe we need at the club.
“He has since gone on to develop those attributes with a track-record of success in the Bundesliga and with a progressive and ambitious club in RB Leipzig.
“As soon as we met, Ralph’s enthusiasm for football was contagious and his hunger to take on a new and challenging job in the Premier League was evident.
“In our discussions, he very quickly aligned himself with the values and the vision of the club.
“Southampton Football Club’s past success was built on a clear identity. The foundation of this identity was a focus on developing players, whether from within our academy or after joining from other clubs.
“Ralph’s ability to teach the game and to develop talent is evident in his past and is a centrepiece of why he is the perfect choice to be the new Saints manager.”
Hasenhuttl became Leipzig boss in the summer of 2016, with them having just secured promotion to the Bundesliga, and he guided them to a second-placed finish the following season.
Last term they came sixth, as well as reaching the Europa League quarter-finals.
Hasenhuttl will be supported at Southampton by existing first-team assistant coach Kelvin Davis, head of goalkeeping Dave Watson and head of sports science Alek Gross.
Davis will be in charge of the team for Wednesday evening’s clash with Tottenham at Wembley.