Work has begun to increase the capacity of Allington Reservoir near Kington St Michael.
The £3.5 million scheme by Wessex Water will result in the storage capacity increasing by five million litres.
A new drainage facility will also be built from the reservoir, next to the A350, to help prevent flooding in the area.
Project manager Joe Edmunds said: “This is one of a series of schemes in the water supply grid programme that will help us meet future demand for water, ensure security of supply to our customers and meet reductions in abstraction licences required by the Environment Agency to improve flows in some rivers and protect their ecology.
“While we will work as quietly and courteously as possible, some noise and increased traffic movement may be experienced during construction. However, there will be no increase in noise and or traffic when the works are complete.”
The work is expected to be completed by next November.