Watson acknowledged his "political differences" with Corbyn in a resignation letter but said the decision was personal rather than political.
That deal, he said, was not just "oven ready", but "a great deal", one "able to deliver all the advantages of leaving the European Union: making our own laws, controlling our own borders, taking back our money, and exercising all kinds of new freedoms".
British Prime Minister Boris Johnson compared his main rival to Soviet dictator Joseph Stalin on Wednesday as he prepared to officially launch the governing Conservative Party's campaign for the December 12 election.
Johnson's Conservatives are trying to emphasise Labour's divisions on the defining issue in contemporary British politics.
Members of the Jewish community hold a protest against Britain's opposition Labour party leader Jeremy Corbyn and anti-Semitism in the Labour party, outside the British Houses of Parliament in central London on March 26, 2018.
He said: "I will cooperate in full with the investigation under the Ministerial Code which will now take place and I am confident I will be cleared of any breach or wrong doing".
Meanwhile, long-simmering divisions in the Labour Party between centrists and supporters of Corbyn were on display when deputy leader Tom Watson announced that he would not be standing in the election.
That followed a foot-in-mouth moment from his ally Jacob Rees-Mogg, who had to "profoundly apologise" Tuesday for suggesting that some of the 72 victims of London's 2017 Grenfell Tower inferno could have survived if they followed their "common sense" and fled for safety.
And he warned that under UK Labour 2020 would be a "horror-show of dither and delay" on Brexit. "I will spend this election fighting for brilliant Labour candidates and a better future for our country".
"They pretend that their hatred is directed only at certain billionaires - and they point their fingers at individuals with a relish and a vindictiveness not seen since Stalin persecuted the kulaks", Johnson wrote.
The kulaks were wealthier farmers that the Soviet dictator killed in their thousands during his reign of terror in the 1930s.
"After 35 years in full-time politics, I've chose to step down and will be campaigning to overcome the Tory-fuelled public health crisis", he wrote. Surveys urged his predecessor Theresa Could had an enormous lead going right into a snap election in 2017, exclusively to see her parliamentary majority worn out. Because I will be a very different kind of prime minister.
The 70-year-old socialist, he said, was offering the country a "nightmare programme in which he would seek to renegotiate the deal in some unspecified way, and would then put that deal to the people in ANOTHER toxic and tedious referendum" - prolonging uncertainty for businesses and investors.
"I am absolutely, categorically ruling out Liberal Democratic votes putting Jeremy Corbyn into Number 10", Swinson said.
His opposition to Mr Corbyn angered allies of the Labour leader and on the eve of the Labour Party conference in September, they made an unsuccessful attempt to oust him by abolishing the post of deputy leader. The Liberal Democrats are now running in third place with around 18 percent of the vote.