Watkins, a former state junior representative, collapsed unconscious when the ball deflected off a stick and hit her on the head, match officials said.
Watkins died in an ambulance on the way to hospital after attempts were made to revive her at the ground, officials said.
Hockey Australia chief executive Mark Anderson expressed his organisation's support and sympathies to the Watkins family.
"(Field) Hockey is a sport that is known for its strong sense of community. I know that members of our two national teams and players involved at all levels of our sport are saddened by this tragic event," Anderson said in a statement.
"The Kookaburras (men's national team) wore black arm bands in the final of the London International Invitational Hockey Tournament overnight out of respect for Lizzie and her family," he said.
Australia's five-time world player of the year Jamie Dwyer said via Twitter he was devastated by the news, which was "such a sad day in the hockey world."