Watford recovered from one of the most disgraceful decisions ever seen on a football pitch to battle to a gutsy draw.
The guilty man, assistant referee Nigel Bannister, should never be allowed to officiate at a Football League game again after giving Reading a goal that never was.
Watford's John Eustace and Royals' striker Noel Hunt were involved in a challenge. As the ball was hooked back into play from wide of the post, the assistant flagged for a goal instead of a corner, inexplicably deciding the ball had crossed the line inside the posts.
Stephen Hunt, who took the corner that led to the cock-up, described the decision as "the worst I have ever seen". And the match assessor told Watford officials he was embarrassed by it.
Assessor Paul Rejer said: "Bannister has been on the list for many years and if an error has been made he will be aware of it. It will be looked at on DVD and we'll take it from there."
Reading boss Steve Coppell said: "I was sitting in the stand and when the whistle went I thought it was for a free-kick.
"It was not a goal, we don't want a goal, and this proves once again the game is calling out for TV evidence.
"We had a Hawkeye at our training ground and it took about 10 seconds to stop the game and re-run incidents." Asked if he thought of telling his team to let Watford score to make amends for the cock-up, Coppell replied: "It's not the responsibility of one team to right a wrong.
"It's the responsibility of the officials to get it right in the first place."
Watford boss Aidy Boothroyd said: "It was like a UFO had landed. I just could not believe it and when the whistle went I thought it was for a free-kick for us.
"I spoke to the referee afterwards and he told me he works as a team with his assistants. If one of them tells him it's a goal he has to go with it."
Boothroyd was later sent to the stands for complaining when the referee stopped his player taking a quick throw-in.
"The pity for me is that the incidents overshadowed a courageous performance from my team," he said. And Coppell said the injustice of the goal had stung Watford into furious retaliation.
"It gave them something to bite on, the cause to have a real go," he said.
Watford had run into trouble after only 90 seconds when they lost keeper Mart Poom with a dislocated shoulder after a collision with Stephen Doyle.
He was replaced by 20-year-old debutant Scott Loach, who earned a man-of-thematch rating with a solid performance.
Justice was done in a storming second half when Watford stood the game on its head with two goals in seven minutes.
The first came from Tommy Smith, who slammed in from close range in the 57th minute after a free-kick from Jon Hartley.
Then John-Joe O'Toole pounced to put Watford in front.
But 25-year-old referee Stuart Attwell had the last word, awarding Reading an 87th-minute penalty, for a foul by Lee Williamson. It was tucked away by Stephen Hunt to set the seal on a lively match.
Watford: Poom (*LOACH, 4mins, 8) - Mariappa 6, Bromby 6, DeMerit 6, Harley 6 - Williamson 5, O'Toole 6 (Bangura, 77mins), Eustace 6, McAnuff 5 (Ainsworth, 34mins, 6) - Smith 7, Hoskins 6.
Reading: Hahnemann 6 - Rosenior 5, Pearce 5, Bikey 5, Armstrong 5 - *KEBE 7, Karacan 6, Harper 6, S Hunt 6 - Doyle 6, N Hunt 6 (Long, 57mins 5).
Referee: S Atwell 4.