The 31-year-old vice captain returned to Sydney last week after he was dropped for the third Test after failing to prepare feedback on how the team could improve and deliver it to management.
Watson, whose wife gave birth last week, made it clear he felt the punishment was overly harsh and said he would be considering his future, but has decided to battle on.
"I've had several constructive discussions with team management back in Mohali over the past few days," he said.
"We've spoken about how we are going to work together to move forward, as Australia attempts to climb back to the top of the ICC rankings.
"I've a burning ambition to be an Australian Test player for as long as I can be and help Australia win those big Test series as well as the big ICC tournaments."
Watson was one of four players, along with James Pattinson, Mitchell Johnson and Usman Khawaja, who were made unavailable for selection for the third Test in Mohali after failing to complete an assignment set for them by coach Mickey Arthur.
His dumping fuelled rumours of a rift with skipper Michael Clarke, which was intensified by Cricket Australia general manager Pat Howard saying Watson was only "sometimes" a team player.
Watson said he had spoken with Pat Howard, Cricket Australia's performance chief, and they were both now "on the same page".
"I'm looking forward to getting around the boys again and concentrating on moving forward. I'm entirely committed to the team and being the best player I can be," he said.
Head coach Mickey Arthur welcomed his decision: "Shane's recommitment to the team in his chats with me this week have been really positive.
"We're looking forward to having Watto back and around the group as we prepare for the fourth Test."
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