Watford's opening goal appeared to be offside. Lee Williamson took a free-kick and skipper Marlon King touched the ball on to Danny Shittu who was clearly in an offside position. The goal was allowed to stand, possibly because the referee's assistant failed to spot King's slight touch.
The second was down to a blunder by Reading keeper Marcus Hahnemann. Late in the game he allowed Tommy Smith's cross to slip through his hands and King simply had to nod the ball into an empty net.
The biggest talking point of the first half came when England's Under-21 international striker Leroy Lita was brought down by Cedric Avinel. It appeared to be a clear penalty but referee Dermot Gallagher simply waved play on, to the anger of the home crowd.
Watford had suffered and early blow when Douglas Rinaldi was taken off in the eighth minute after appearing to break his nose in a collision with Reading midfielder Steven Sidwell.
After briefly playing with ten men Watford brought on Gavin Mahon who had been dropped from the starting line-up.
Reading's biggest threat came from Lita, back in the side after completing a three-match suspension. His first chance of a goal was spoiled when he took too strong a touch, allowing Foster to get to the ball first.
The closest either side actually came to scoring early on was when Nicky Shorey's cross from the left was headed against the crossbar by Dave Kitson.
Four minutes before the break Foster showed his qualities again by racing out to flick the ball off Lita's toes as the Reading striker again threatened to score.
Three minutes after the break it was the Lita-Foster show again, with the Reading striker unleashing an effort which the keeper did really well to turn round the post for a corner.
It was a disappointing performance by Reading in their final home game of the season and led to a relatively low-key parade around the pitch afterwards.
Before the kick-off central defender Ivar Ingimarsson was awarded the club's player of the year trophy, with Shorey in second place in the voting and Stephen Hunt third.