The scheme is expected to directly protect around 60 homes from flooding and several hundred properties will benefit in terms of improved drainage.
Thames Water's wastewater director Bob Collington said: "While we implemented a number of interim measures to help individual properties, it was clear that a major engineering scheme was needed to solve the problem for the future.
The scheme is scheduled to be fully completed in March 2010 and will be delivered in three phases.
Autumn 2008 - December 2008
Upgrades and improvements to Haydon End sewage pumping station including installing new pumps
July 2008 - January 2009
Repair and replacement of existing sewer pipes in the areas most prone to flooding, including the High Street and Blunsdon Road.
December 2008 - March 2010
Re-design of the sewer network and installation of new sewers in Haydon Wick.
This will be the largest part of the scheme but details of the works are still being examined, and may involve the construction of a new pumping station at Green Meadow, which would divert sewage flows to Swindon sewage treatment works.