Mr Watson led the council to unitary status in 1998 and has been the officer catalyst to Blackburn with Darwen securing a national reputation for excellence and pioneering local government.
Mr Watson, who was born and bred in Blackburn, was awarded the CBE in the New Year's Honours' List for his services to local government. He is one of a small group of chief executives who are invited to meet the permanent secretaries on an annual basis to discuss central local relationships and key issues for modern local government. Mr Watson was also involved in the early development of the CPA, advising the Audit Commission.
He said: 'This has been a difficult decision for me having worked for the local authority for so long, with so much having been achieved, and so much in the pipeline to look forward to. However I do think now is the right time to announce my retirement, for me personally and the council. There should be sufficient time to appoint a successor and make sure there is continuity before I leave.
'I am under no pressure to leave, indeed the contrary is true. However I leave Blackburn with Darwen Council when it is widely recognised as one of the leading councils in the country, and I am confident that it will maintain and improve its standing in the future.'
Kate Hollern, leader of the council, said; 'It is no coincidence that Blackburn with Darwen has been rated four times consecutively by the independent Audit Commission as an excellent/four star council whilst Phil has been chief executive. His contribution in supporting councillors to continually improve services and to provide good community leadership cannot be overstated'.
Colin Rigby, leader of the opposition Conservative group, said; 'Phil has always worked in partnership and valued the contribution that public, private, voluntary and community sector groups make to the life and economy of the borough. He has been a key player in leading the regeneration that is transforming the towns of Blackburn and Darwen'.