The politician amended an Early Day Motion by long-time opponent of violent video games and fellow MP Keith Vaz, which called for the BBFC to "take further precautions" on software sales.
Watson's alterations defended Modern Warfare 3, rejecting Vaz's claims that its content resembles the July 7 bombings in London, and stating that adults "should be free to choose their own entertainment".
The revised motion "encourages the BBFC to uphold the opinion of the public that whilst the content of video games may be unsettling or upsetting to some, adults should be free to choose their own entertainment in the absence of legal issues or material which raises a risk of harm."
Watson said: "The game neither draws upon nor resembles real terrorist attacks on the underground."
The MP, who was part of the Select Committee that questioned James Murdoch and Rebekah Brooks on phone hacking at the News of the World, told The Guardian that he's a big fan of the game.
"Keith, for many year, has been very critical of adult content in video games and he's homed in particularly on the Call Of Duty franchise," Watson said.
"He's tabled a motion, about a week ago, condemning the game. I just amended it to make the point that the game has an 18 classification and that the BBFC said in a statement that it bore no resemblance to the July 7 bombings in London - which is what he refers to in his motion.
"There may be disturbing or unsettling content in that game, but adults should have the choice as to whether they want to play those sorts of games or not."
Call of Duty: Modern Warfare 3 was released for Xbox 360, PC, PlayStation 3 and Wii on November 8.
> Feature: Video Game Controversy