The good performance during the recent Bangladesh series helped Watson overtake Hasan by a comfortable 44-point margin. The Australian took three wickets and scored 294 runs in the series.
Watson's scores of 37, 185 not out and 72 in the series have also helped the 29-year-old Queenslander vault nine places to a career-best fourth position in the batsmen ranking.
He is now the highest-ranked Australia batsman with Mike Hussey staying in sixth place, captain Michael Clarke rising two places to 11th spot and former captain Ricky Ponting moving one place up to 16th position, The Herald Sun reports.
Meanwhile, India and Australia have won 175,000 dollars each for finishing as the No.1 ranked sides in Test and ODI Championship tables, respectively at the April 1 cut-off date.
India has been sitting on top of the Test championship table since December 2009 while Australia has been occupying the no.1 position on the ODI championship table since leapfrogging South Africa and India in September 2009.