Has anyone resolved the cannot connect watch because needs update and no internet connection please

First force restart the watch. i.e. press and hold both the side button and Digital Crown for at least 10 seconds, then release both buttons when you see the Apple logo. 

Then while the Watch is restarting Force Restart the paired iphone   

Force restart iPhone – Apple Support (UK)

 Then in the iphone, Settings, General, Transfer or reset iphone, Reset, Reset network settings. 

Then, unless your provider forbids it, reset the router to factory settings which usually involves a paperclip in a little hole. 

Reconnect the iPhone to Wi-Fi and try updating the Watch again. It must be on the charger to update. 

Any chance you use a VPN on your iPhone? If you do, get rid of it. iPhone doesn't need one at all and can cause issues like this.

Unless someone else set up your iPhone, you'd likely know if you have a VPN. But to check go to the Settings app and Tap General > scan down to VPN & Device Management. Is anything showing there? If you don't have a VPN, it would say Not Connected.