The 20-year-old has scored 12 goals in 25 starts since joining the Shrimpers, who are currently in the play-off places in League Two.
United boss Paul Sturrock told the club website: "We're delighted to be keeping Britt here with us until the end of the season, it's excellent news.
"We would like to thank everyone at Watford for allowing him to stay with us.
"The young lad is really enjoying his football and has bonded well with all the squad so it seemed right for him to remain with us considering how well he has done on the pitch.
"With us looking to get promoted it's important we can keep players like Britt who can win us matches, so we're thrilled he'll be here until May."