The 18.2 km link, combined with reformed abstraction licences, will reduce the amount of water the company can extract from the River Kennet by 50 per cent.
The River Kennet is a listed SSSI because it is one of only 200 chalk streams in the world and provides habitats for water voles and brown trout.
The scheme will allay Environment Agency and Action for the River Kennet (ARK) fears that water removed at Axford and Ogbourne treatment works has a detrimental impact on the river.
The pipeline will carry water from north Swindon to south Swindon, and link properties to the Farmoor reservoir in Oxfordshire, which takes its water from the river Thames.
The new mains will run under the M4 and the London to Bristol railway, and pass through the Honda car plant, where Thames Water will share a trench with SSE, who is carrying out mains cable laying work.
Alongside plans for the pipeline, Thames Water will see its Axford licence will be reduced from 13.1 million litres per day (Ml/d) to 6 Ml/d at times when the flow in the Kennet is low, and its Ogbourne licence will be reduced to zero, down from an average of 3.5 Ml/d now.
Thames Water currently supplies water to 30,000 homes in Swindon from groundwater sources, such as Axford and Ogbourne, water which would otherwise be available to flow into the River Kennet.
Thames Water’s abstraction manager Steve Tuck said: “We agree with the Environment Agency and Action for the River Kennet that we need to reduce our reliance on the Kennet and believe this pipeline will help to ensure a healthy future for this very important chalk stream, which gives so much pleasure to so many people.”
ARK director Charlotte Hitchmough added: “We are very excited to see this project really starting to happen now.
“It will provide protection for one of England’s best loved chalk streams, and we look forward to seeing a healthier river from 2016.”
Plans have been submitted to Swindon Borough Council and Wiltshire Council, and work is expected to start in may 2015, and to be completed by April 2016.