Construction of the middle canal of the south-to-north water diversion project will begin in October.
A trunk canal measuring 1,389 km will be built to carry water from the mighty Yangtze River at the Danjiangkou Reservoir in central China's Hubei Province to parched north China, including Beijing and Tianjin.
A total of 731 km of the canal will be built in Henan Province, the country's most populous region, said sources from the Henan Provincial Development and Reform Commission.
The construction will cost 176.6 billion yuan (about 21.28 billion US dollars) and will take six years to finish. Upon completion of the middle canal, 14 billion cubic meters of water will be diverted annually from the Yangtze to northern China.
By then, water shortages, which have long hindered the development of Henan, will be greatly alleviated, said an official with the commission.
The entire water diversion project, the completion of which will cost China 59 billion US dollars, consists of three south-to-north canals, each extending 1,300 km across the eastern, central and western parts of the country.
The three canals, which will be built in three stages, will link up the country's four major rivers, namely the Yangtze, Yellow, Huaihe and Haihe Rivers.
The building of the eastern route got underway late last year, while the third waterway has yet to be approved by the central government.