Watson's selection on the right wing in place of injured Bath team-mate Semesa Rokoduguni (thigh), who made his debut last weekend against New Zealand, was the only change to the run-on side beaten 24-21 by the world champion All Blacks in England's opening November international.
The 20-year-old Watson, who made his Test bow by coming on as a second-half replacement last weekend, saw his place on the bench taken by Harlequins wing Marland Yarde in the only other change to England's matchday 23.
"Anthony has been pushing hard for a while and has been in impressive form for Bath and in training with us," Lancaster said in a Rugby Football Union statement.
"It was great that he got on against New Zealand and we feel he's ready to start. Equally, it's good to have Marland back in the matchday 23."
England:
15 Mike Brown, 14 Anthony Watson, 13 Brad Barritt, 12 Kyle Eastmond, 11 Jonny May, 10 Owen Farrell, 9 Danny Care, 8 Billy Vunipola, 7 Chris Robshaw (captain), 6 Tom Wood, 5 Courtney Lawes, 4 Dave Attwood, 3 Dave Wilson, 2 Dylan Hartley, 1 Joe Marler
Substitues: 16 Robert Webber, 17 Matt Mullan, 18 Kieran Brookes, 19 George Kruis, 20 Ben Morgan, 21 Ben Youngs, 22 George Ford, 23 Marland Yarde
15 Willie le Roux, 14 JP Pietersen, 13 Jan Serfontein, 12 Jean de Villiers (captain), 11 Bryan Habana, 10 Pat Lambie, 9 Cobus Reinach, 8 Duane Vermeulen, 7 Schalk Burger, 6 Marcell Coetzee, 5 Victor Matfield, 4 Eben Etzebeth, 3 Jannie du Plessis, 2 Adriaan Strauss, 1 Beast Mtawarira
Substitutes: 16 Bismarck du Plessis, 17 Trevor Nyakane, 18 Coenie Oosthuizen, 19 Bakkies Botha, 20 Teboho “Oupa” Mohoje, 21 Francois Hougaard, 22 Handré Pollard, 23 Cornal Hendricks