Football League members have voted to amend rules allowing clubs an unlimited number of international loans.
Clubs agreed unanimously to close a loophole which meant Watford could last season legitimately bring in 10 players from Udinese, the Italian club that shares the Pozzo family as owners.
Under the new regulations international loans will be treated the same as domestic loans, with clubs limited to a total of five loanees in matchday squads and a maximum of four from the same parent club.
The vote, which required 51% backing, comes after Watford's approach drew heavy criticism from their Championship rivals.
Ian Holloway - the Crystal Palace manager whose side beat the Hornets in last month's play-off final - was among the most outspoken critics, calling the previous system "ludicrous".
He said in February: "I need some foreign scouts, or to befriend a big club like (Watford) have, and to nick all their players.
"They've got nine from one club! It's a loophole and that's wrong. Unlimited foreign loans? It can't be right."