Brendan Rodgers, a long-time admirer of Graham, initially saw a ?3m offer rejected by the Hornets soon after Swans gained promotion to the Barclays Premier League courtesy of last Monday's play-off final victory over Reading at Wembley.
Record breaker: Swansea have had a ?3.5million bid accepted for Watford striker Danny Graham
But the south Wales club returned with an improved offer which Watford accepted over the weekend, paving the way for talks over personal terms with the forward who bagged 24 league goals last season to top the npower Championship`s scoring charts.
Swansea's previous transfer record is the deal which took Scott Sinclair from Chelsea to the Liberty Stadium last summer for an initial ?500,000 which has the potential to rise to ?1m with add-ons.
There are no shortage of suitors for Graham's services, with Watford having previously rejected bids of ?2.5m from QPR and West Brom.
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And although the path is now cleared for the 25-year-old to talk to Swansea, rival parties will be alerted to the ?3.5m figure accepted and may now launch similar bids.
A statement on Watford's official website confirmed: 'Watford Football Club confirms that it accepted a ?3.5million bid for Danny Graham from Swansea City FC over the weekend.
'This means the player is permitted to talk to the Swans about his future.
'The 25-year-old striker remains under contract at Vicarage Road in the meantime.'
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Source: Daily Mail
Source: Daily Mail