Works will involved the construction of collection and distribution mains to augment the existing water supply to the town, under the Arklow Water Supply Scheme.
Approving the funding, Environment Minister John Gormley said the three phase scheme will eventually cost €35m.
Phases one comprised the development of groundwater production wells, which is already completed.
Phase two comprises the construction of collector and distribution mains, and the provision of a new water treatment plant at Ballyduff, at an estimated cost of over €18m.
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Phase three of the scheme will provide the additional groundwater sources needed to meet anticipated water demand in Arklow for the next 20 years.
When completed, the scheme will double the capacity of the water supply for the town.
"The funding I have approved today will allow the construction of essential pipelines to bring a good quality and reliable drinking water supply to consumers in Arklow," the Minister said.
"The council is already working on other elements of the scheme and the contract documents for the new water treatment plant at Ballyduff are currently under examination in my department.
"This important scheme represents continuing capital investment under the Water Services Investment Programme to improve the infrastructure in the Wicklow area," continued the Minister.
"My approval of the funding now allows Wicklow County Council to complete the contract formalities with the successful tenderer so that work on the collector and distribution mains can start," he added.
(PR/KMcA)
