Vunipola has been out since December with a knee injury and had been expected to return for the Twickenham clash on February 26.
That now appears unlikely, although he could feature for Saracens when they take on Gloucester in the Aviva Premiership on Friday as he looks to prove his fitness.
Northampton prop Paul Hill has therefore been retained but Wasps' Matt Mullan has been left out.
Bath wing Watson does return to the 25-man squad after overcoming a hamstring problem that ruled him out of the wins over France and Wales which leave England top of the Six Nations table after the opening two rounds of matches.
England's overall winning run was extended to 16 consecutive matches at the Principality Stadium and they will look to further increase that against Italy at the end of the month.
Jack Clifford, Dan Cole, Ellis Genge, Jamie George, Dylan Hartley, James Haskell, Paul Hill, Nathan Hughes, Maro Itoje, Joe Launchbury, Courtney Lawes, Joe Marler, Kyle Sinckler, Tom Wood.
Mike Brown, Danny Care, Elliot Daly, Owen Farrell, George Ford, Jonathan Joseph, Jonny May, Jack Nowell, Ben Te'o, Anthony Watson, Ben Youngs.