PIPE works are expected to begin at Barkers Creek Reservoir at Harcourt next week.
Coliban Water has been draining the reservoir for six weeks to allow for the construction of the supply network for the new piped rural system as part of the Harcourt Rural Modernisation Project.
Infrastructure delivery manager Ken Laing said the reservoir will be closed to the public for up to three months.
"We have to build a new inlet structure as well as a new outlet structure," he said.
"Both will be located below the normal water level so we have had to take the water out to have the bottom dry to construct the new pipeline.
"We have been draining it for about six weeks now and this week it should be empty.
"We are allowing four weeks to do the construction works and we are going to start refilling mid-July."
Mr Laing said the reservoir has a total capacity of three gigalitres but usually sits at about 1.5 gigalitres.
He said water quality was being monitored during the release of water from the reservoir.
"We have liaised with the North Central CMA, fisheries and the EPA in the planning for this project and will be working with them as the project progresses," he said.
"Once the works are complete we will commence refilling the reservoir from our Coliban catchment storage located near Kyneton via Coliban Main Channel.
"Refilling will be a gradual process to minimise water quality impacts.
"Our water security position is strong with the storage to be partially refilled in time for the 2014/15 rural season."
The project aims to replace the inefficient rural channel system with a network of pipes.
Coliban Water managing director Jeff Rigby said the project would provide residents with greater water security.
"(The channels) have serviced the region well but ageing over time mean parts of the channels are leaking," he said.
"The cost of replacing them against installing a pipeline showed the pipes were more efficient."