Since the arrival of Gianluca Vialli as manager, Watford has become the centre of much speculation - with the former Chelsea boss a major draw to players.
Bierhoff looks to be on his way out of Milan after a season spent largely on the bench and the recent arrival at the club of Italian international Filippo Inzahi in a big money move.
New coach Fatih Terim has not explicitly ruled the veteran German out of his plans, but it widely believed that his time in a Rossoneri shirt is limited and that a move to another country is on the cards.
Fulham had been believed to be in for the powerful target-man, but are now believed to be concentrating on Parma's Patrick Mboma.
Bierhoff would certainly bring goalscoring pedigree to Vicarage Road, despite being 33-years-old - scoring 77 goals in the last five years for Milan and, previously, Udinese.
German legend Jurgen Klinsmann recently reiterated that he thought Bierhoff could still perform at the highest level, and there are guaranteed to be several top clubs interested in the marksman.
Sevilla in La Liga have also been recently linked with the German, and it is believed that several clubs in his native Bundesliga - including former side Borussia Monchengladbach are watching the situation carefully.
Meanwhile, Watford have signed Arsenal reserve midfielder David Noble on a three-month loan deal.
The 19-year-old has so far failed to make the breakthrough at Highbury and he has featured for the Under-19 and reserve teams.
The Gunners are keen for the player to go out to another club to gain some valuable first-team experience which he could get at Vicarage Road.
