The Victorian water mains are prone to leaks and bursts. Work is due to commence on Monday 11 August and will be completed in July 2010.
Work will take place in EC4 and WC2, roughly bounded by the River Thames, Middle Temple, Northumberland Avenue, the Strand and Aldwych.
The original cast iron mains will be replaced with new plastic pipes that are more durable and flexible.
Thames Water project manager Jaymin Patel said: "We are committed to tackling leakage in London. This can only be achieved by systematically replacing all of its cast iron water mains that date back as far as the Victorian era. Due to the scale of this work it won't happen overnight, but the benefits of the project are already evident with leakage now at its lowest ever rate."
"We are working closely with Westminster City Council to reduce the impact on traffic and thereby minimise disruption. The latest construction techniques will be used where possible, reducing the need to dig long trenches," she said.
Heart of London Business Alliance chief executive Sarah Porter said: "Heart of London met regularly with Thames Water throughout their mains replacement works in Leicester Square. This helped to minimise disruption by ensuring our businesses were fully informed."