Trailing to Mathias Ranegie's goal six minutes into the second half, Rangers laboured before Joey Barton's 76th-minute free-kick hauled them level.
And top scorer Austin, badly missed during a recent two-month spell out with a shoulder injury, gloriously curled home his 16th goal of the season in the closing stages to clinch a 2-1 victory.
It left Watford's hopes of a top-six finish in the Sky Bet Championship looking remote, although they have a game in hand on most of their rivals.
Rangers boss Harry Redknapp made several changes in the wake of Saturday's loss at Leicester, pairing fit-again duo Austin and Kevin Doyle up front with Ravel Morrison behind them.
But Watford were the better team for large spells of the match and were gifted three chances before the interval - two of them coming after errors by QPR's veteran defender Richard Dunne.
Troy Deeney went through after Dunne mistimed a header, but the striker's low shot was pushed away by Rob Green.
And the dangerous Lewis McGugan fired over after pouncing on the loose ball when Dunne misplaced a pass to Morrison.
Rangers continued to look vulnerable and another mistake - this time by Tom Carroll - set up McGugan, whose strike from near the edge of the penalty area was tipped over by Green.
Watford were able to open up the home defence almost at will and Nedum Onuoha needed to produce a fine last-ditch tackle to block Deeney before Rangers wide-man Armand Traore was similarly alert to deny Daniel Pudil.
At the other end, goalkeeper Manuel Almunia needed only to hold tame efforts from Austin and Morrison before diving to his right to stop Carroll's free-kick in first-half stoppage time.
It was a similar story after the break as Green remained the busier keeper, pushing over Deeney's close-range volley.
But he was unable to rescue Rangers when Deeney headed down Joel Eskstrand's ball into the box and Ranegie finished coolly after turning away from the hapless Dunne - the Swede's third goal of the campaign.
McGugan cleared Austin's goal-bound header from Barton's right-wing corner and Almunia parried a stinging drive from Austin as Rangers at last began to impose themselves.
They were buoyed by Barton's fine goal but looked to have spurned a late chance when Austin was slow to release the ball as his team broke forward.
However, when the ball was then returned to Austin by substitute Bobby Zamora, he steered his shot beyond Almunia and into the far corner.
It summed up his importance to QPR, so they perhaps have reason to be concerned by the fact that Austin was then immediately taken off after appearing to hurt his hamstring.