The 19-year-old had earlier been told he would have to leave the UK and return to his native Sierra Leone.
But after a meeting with Home Office minister Liam Byrne, the Hornets have been handed the option of applying for a work permit.
Watford chairman Graham Simpson told Sky Sports News: "It's not over yet but we're very hopeful that we can now find a way through.
"It's a positive move forward and we're very hopeful for Al.
"He's a special case because he's a highly skilled individual who has a great talent and, if you send him back to the country where he's come from, then he'll be unable to use that talent and that's a great shame.
"He has a fiancee here with a young child and, if he goes out of this country, then the state will have to pay to look after them. Al is quite capable of doing that if he stays here.
"He's had great hardship which has been well documented and he's part of the Watford family. We support him and we're all in this together and hopefully this will be resolved in the next few weeks."