But two late strikes saw them take all three points and move into sixth place in the Championship and into the play-off positions.
Thompson said: "Better late than never. We thought it was going to be one of those games today.
"Their keeper has made some great saves but we as a team never give up. We've played well in our past few home games and not got what we've deserved but we're not just a team here - we're a squad and we keep everyone involved.
"It was end to end stuff in the dying stages and thankfully we got the break that we deserved."
The Hornets were kept in the game by their in-form keeper who pulled off four quality saves in the first half.
He was furious though when Blackpool eventually took the lead - Neil Eardley crossed into a packed area and Blackpool's leading goal scorer Charlie Adam slotted home from close range after 17 minutes. The goal stood despite Loach's complaints that he had been impeded.
Blackpool however failed to take advantage of their domination. Adam's cheeky attempt from halfway flew just wide and his athletic volley on 30 minutes went over the bar.
Keith Southern saw two efforts deflected wide and Adam and Eardley both wasted free kicks that ballooned over the bar.
Watford struggled to get into the match and only had two attempts at goal in the first half - but the second brought them an equaliser 10 minutes after falling behind thanks to some calamitous Blackpool defending.
Heidar Helguson, on loan from QPR for his second spell with Watford, fought his way to the byline and squared for England's under-19 midfielder Henri Lansbury to fire home despite being stood in the middle of four Blackpool defenders.
The Seasiders put the visitors under pressure again in the second half but fell behind to a well-worked goal. Tom Cleverley, on loan from Manchester United, shot past Pool keeper Paul Rachubka after a smart one-two for an undeserved lead with 11 minutes remaining.
Blackpool pressed for an equaliser but had to wait until the 88th minute when veteran midfielder Keith Southern finally beat Loach.
The home side then threw everything forward and in the 91st minute Brett Ormerod grabbed the winner.
Watford manager Malky Mackay said: "I'm bitterly disappointed as I thought we'd edged our way back into the game.
"Our keeper is an England player and did what he's been doing all season."