Troy Deeney scored eight minutes into second half stoppage time to end City’s hopes of reaching Wembley as Watford took a dramatic 3-2 aggregate victory to book a spot in the npower Championship Play-Off Final.
It was a dramatic ending to an enthralling game that saw City perform admirably and come within a whisker of winning the tie with a last minute penalty, only for it to be saved and Deeney to net the winner from the resulting counter attack.
The Hornets stung City in the 15th minute to take a 1-0 lead on the day when Matej Vydra struck a stunning left foot volley from a Marco Cassetti pass to find the top corner.
However just four minutes later, The Foxes were back on level terms and ahead on aggregate through David Nugent, as the striker headed in Matty James’ corner at the far post – his eighth goal in 11 games against the Hornets.
Vydra then added a second for Watford on the hour mark after combining with Deeney to seemingly take the tie into extra-time.
But City were to be denied their shot at the Premier League in the most dramatic of circumstances.
After Anthony Knockaert was fouled in the area, City were awarded a penalty. The Frenchman took the kick, but when Watford ‘keeper Manuel Almunia saved with his feet, the Hornets hit Leicester on the counter, resulting in Deeney firing a winner past Kasper Schmeichel with virtually the last kick of the game.
Nigel Pearson stuck with the team that secured a 1-0 first leg win with Thursday’s goal scorer Nugent leading the line alongside Chris Wood in a 4-4-2 formation that saw Knockaert and Lloyd Dyer on each flank.
There were three changes for the hosts meanwhile, as Deeney returned from suspension to replace Alex Geijo and partner Vydra in attack, with Matthew Briggs and Cristian Battocchio the other inclusions at the expense of Daniel Pudil and Jonathan Hogg.
With both sets of supporters in full voice, it was an energetic start from each side, with the best opportunity for The Foxes falling from a series of three corners on the right hand side.
Knockaert swung it in towards the near post where Ritchie De Laet drilled it goal-wards but saw his effort blocked by Deeney amid some handball shouts, which were waved away by referee Michael Oliver.
Watford were a threat though, and they almost hit City swiftly on the break on seven minutes after Deeney’s clever ball fell for Vydra, only for the Championship Player of the Year to drag his shot wide from a good position.
The returning Deeney followed that up with an effort of his own; turning excellently on the edge of the area to unleash a powerful effort the Schmeichel to well to reach and turn away.
Eventually the pressure told, and the hosts took the lead on the day through a spectacular Vydra strike – his first in 13 games, as Cassetti chipped a ball over the top that was met with a stunning left foot volley from the Czech which found the top corner, giving Schmeichel no chance.
But that lead didn’t last long, as man-of-the-moment Nugent headed City level just four minutes later.
Dyer’s pace had won The Foxes a corner on the left, which James clipped to the far post, where City’s top scorer rose highest to head the ball low past Almunia for his 16th of the season, giving City a 2-1 aggregate lead in the process.
Knockaert then fired a first-time effort over from Dyer’s cut-back as a tense game began to settle down.
After the half hour mark Deeney tested Schmeichel again, while Wood was booked for shooting after the assistant had flagged for a close offside from Knockaert’s pass.
Meanwhile, everything was going through Deeney for the Hornets, but the big striker just couldn’t find that killer strike, as there was little to choose between the sides going into the break.
Both sets of teams emerged unchanged for the second half, but with City leading 2-1 on aggregate, Watford needed goals, and Cassetti did his best to find one in the early stages, but his shot went comfortably over the crossbar.
At the other end, Knockaert curled a free kick narrowly over the crossbar, after Joel Ekstrand on the edge of the area had fouled Wood.
Battocchio then followed it up with a drive that was deflected just wide for a Watford corner, while Nugent’s far post header from De Laet’s centre was saved comfortably by Almunia.
As the game approached the hour mark, Watford had a great opportunity to level the scores through Almen Abdi following some good wing play by Briggs on the left, but after Vydra’s lay-off, the Swiss saw a first-time shot deflected a yard or so wide.
Pearson responded with the introduction of on-loan Spurs man Harry Kane, in a straight switch for Wood in attack alongside Nugent, while Gianfranco Zola brought on Fernando Forestieri in for Lloyd Doyley soon after as he threw three up front.
A matter of seconds later, the hosts struck again to take the lead on the day and draw level at 2-2 on aggregate.
Vydra played a one-two with Deeney on the edge of the area, and was able to fire low into the bottom corner – his second goal of the match.
Meanwhile City brought on Danny Drinkwater for Dyer in an effort to shore up the midfield.
Past the 70th minute and Battocchio brought a good save out of Schmeichel from range, while Nugent won The Foxes a free kick on the edge of the box, only for the same player to curl it over the crossbar.
Kane and Wes Morgan both tested Almunia from close range as well as a Forestieri effort going over from a corner, as a goal for either side could prevent extra-time and book a spot at Wembley.
With ten minutes to play, it was a heart-in-mouths moment for The Foxes, as Deeney broke through and put the ball in the net, but a delayed offside flag came to City’s rescue as Hogg came on for Watford’s Battocchio.
As the 90-minute mark approached, Watford appeared to have the slight edge, but despite getting into some promising positions down either flank, they were still unable to score.
However, there was to be an unbelievable amount of drama still to unfold deep, deep into stoppage time.
Knockaert broke down the right and twisted an turned his way into the box and eventually drawing the foul from Cassetti, leaving the referee no option but to point to the penalty spot.
The Frenchman stepped up to take the spot kick and fired it down the middle only to see it saved by the feet of Almunia.
Then, Watford launched a cutting counter down the right, with the ball dropping for Deeney to hammer the ball into the net, making it 3-1 on the day and handing the Hornets a 3-2 aggregate win along with a spot at Wembley.
Watford (3-5-2): Almunia (c), Deeney, Doyley (Forestieri 65), Briggs, Vydra, Anya, Abdi, Cassetti, Battocchio (Hogg 79), Chalobah, Ekstrand
Unused subs: Bond, Eustace, Hall, Pudil, Geijo
Goals: Vydra 15, 66, Deeney 90
City (4-4-2): Schmeichel, De Laet, Morgan (c), King, Dyer (Drinkwater 67), Keane, James, Schlupp, Knockaert, Nugent, Wood (Kane 61)
Unused subs: Logan, Konchesky, Marshall, Vardy, Moore
Goals: Nugent 19
Attendance: 16,142 (2,206 away)
Referee: Michael Oliver