The 4km pipe will carry water from Woods Farm water treatment works to the storage reservoir in Streatley, and then on to the reservoir at Moulsford.
Thames Water says the pipe will increase the amount of water that Woods Farm water treatment works can supply to the wider network by more than four times the current amount.
Andrew Popple, capital delivery manager for Thames Water, said: “The south east of England is seriously water-stressed so we need to make the best use of all the water available to us.
“This new pipe will allow us to take more water from the ground and distribute it around the area.”
According to the water company, the project will take 12 months to complete and the pipeline will be laid using no-dig technology where possible, boring under roads and across fields to reduce the amount of time it takes and the impact on local traffic.