Grayson moved quickly to snap up the 35-year-old as Ian Evatt remains on the long-term injury list while Kaspars Gorkss is suspended.
Jackson has a wealth of experience but has struggled to break into the Watford first team since arriving at Vicarage Road from Wigan Athletic in the summer.
He has made only two appearances for the Hornets this term after playing in 178 games for Wigan.