The programme is being backed by £720 million of borrowing from the Scottish government.
The planned investment projects include a £100 million waste water tunnel for Glasgow, designed to improve water quality in the River Clyde and reduce flooding in Mount Florida and Giffnock.
Other infrastructure investments in the plan include: more than £280 million to improve water mains and water treatments works; £45 million to deliver solutions to around 400 external sewer flooding problems; more than £60 million to reduce the impact of discharges to the River Clyde from Daldowie and Dalmarnock Wastewater Treatment Works; and more than £17 million for drinking water improvements.
Douglas Millican, Scottish Water’s chief executive, said: “I am delighted that we are announcing the start of this major investment programme for 2015-21 which will enable Scottish Water to continue to provide first-class customer service, while supporting the Scottish economy and creating jobs in the construction industry.”
Deputy Scottish first minister Nicola Sturgeon added: “I recognise that households and businesses are under financial pressure.
“That is why I expect Scottish Water to continue to deliver this £3.5 billion investment programme without the need for inflation-busting charge increases.”