Work has started on a new $8.5 million sewer main along Shell Road, between Point Lonsdale and Ocean Grove.
The 4.3 km pipeline will connect a new sewer pumping station on Shell Road, west of Point Lonsdale, to an existing pumping station on Bonnyvale Road, Ocean Grove.
Construction will be split into four stages, with work currently underway on the first 1.9 km stretch.
The pipeline is being bored underground to minimise disruption.
About 70 per cent of the first section has been bored. Once boring has been completed, the pipeline will be pulled through the tunnel.
Barwon Water General Manager Capital Projects Paul Northey said the project was part of a major upgrade of infrastructure on the Bellarine Peninsula.
"Barwon Water is spending $16 million upgrading the Queenscliff and Point Lonsdale sewerage system to improve services and meet future growth," Mr Northey said.
"In addition to the pipeline, a new pump station will be constructed and an existing pump station upgraded. This will increase the capacity and reliability of the system and meet anticipated growth for the next 40 years."
Work on the pipeline is expected to be completed in November.
The projects are being delivered by the Barwon Water Alliance, which combines the skills and experience of Barwon Water. Construction company John Holland and design and engineering specialists GHD.