The improvements will be rolled out over a six-year period, and is being supported by £720m of borrowing from the Scottish Government.
As many as 5,000 construction jobs would be supported, drinking water supplies would be improved, as well as protection provided to the natural environment.
Some of the planned projects include:
• More than £280m in improvements to water mains and water treatment works across Scotland
• More than £100m for a Glasgow waste water tunnel to improve water quality in the River Clyde and reduce flooding in Mount Florida and Giffnock
• £45m to deliver solutions to around 400 external sewer flooding problems across Scotland
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• More than £60m to reduce the impact of discharges to the River Clyde from Daldowie and Dalmarnock Wastewater Treatment Works.
• Drinking water improvements at locations including Glenlatterach (£5.6m), Fair Isle (£4.9m) and South Uist (£6.8m).
Douglas Millican, Chief Executive of Scottish Water, said: "I am delighted that we are announcing the start of this major investment programme for 2015-21 which will enable Scottish Water to continue to provide first-class customer service, while supporting the Scottish economy and creating jobs in the construction industry.
"We look forward to working closely with our customers and communities to further improve drinking water quality and the environment the length and breadth of Scotland."
Welcoming the investment, Deputy First Minster Nicola Sturgeon, added: "Water and sewerage services are vital to our everyday lives. It is important that we continue to invest to ensure that these keep on meeting the needs of customers, the environment and economic development.
"I recognise that households and businesses are under financial pressure. That is why I expect Scottish Water to continue to deliver this £3.5 billion investment programme without the need for inflation-busting charge increases.
"The Government will be making available up to £720 million to support this programme. It will also be extending the assistance to more of the charitable sector to help pay for services."
(JP/CD)
