Anglian Water gained planning permission to build a new £44m reservoir and water treatment works near to Newton-on-Trent yesterday.
Construction will take place over the next couple of years with the aim of securing water supplies to the growing population of Lincoln and the surrounding area.
The plans also include a pumping station and underground pipelines.
At the same time Severn Trent Water has submitted a planning application to build a new underground reservoir in Derbyshire, which will be the second biggest in Europe.
Consulting engineer Atkins has drawn up detailed plans of the £30m project to build the covered concrete reservoir next to the existing Ambergate reservoir site.
Construction is set to take about four years and will be carried out in two phases, starting in March 2013.
This will see a new reservoir built alongside the existing site then the old one will also be replaced.