The resilience agreement was signed following a recent consultation with customers, which showed a key priority was to improve the quality and reliability of water supply in the event of a major burst or leak.
The firms, whose supply regions meet at the market town of Wimborne Minster, said that should problems occur at one company, a backup supply would be provided by the other company to avoid any impact on customers.
To facilitate the bulk transfer of water, a small water plant will be constructed at Wimborne Minster where the two companies connect.
Roger Harrington, managing director of Sembcorp Bournemouth Water, said: “Our customers tell us that the safety and reliability of the water supply is their top priority for the service.
“Working together with our neighbouring water company to help ensure this, at a much lower cost than doing it alone, is a great way of delivering benefits at least cost to customers.”