The water infrastructure spend is supported by £720m in borrowing from the Scottish government.
Up to £280m will be pumped into water mains and treatment works with an extra £100m-plus used to fund a new waste water tunnel in Glasgow.
Costain and Vinci is preferred bidder to design and build a 3-mile long sewer tunnel that will improve the water quality of the River Clyde.
Publicly-owned Scottish Water also plans to invest more than £60m on works to reduce the impact on the River Clyde of the Daldowie and Dalmarnock Wastewater Treatment Works.
A further £45m will be used to tackle around 400 external sewer flooding issues, with drinking water improvements also planned in Aberdeenshire, Fair Isle and South Uist and Glenlatterach.
Deputy First Minister Nicola Sturgeon said:”This Government is determined to ensure that Scottish Water continues to be a public sector success story.
“This programme is good news for customers, the construction industry and our environment.”