According to officials, the investment programme will bring significant benefits to the local community and economy and meet the needs of the growing population.
The work includes upgrades and replacements of trunk mains, provision of a new Pumping Station at Gortin and the construction of a new pumping main to facilitate a school development.
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Chris Mellor, NI Water's Chairman and Chief Executive, said: "This level of investment in Omagh is part of our commitment to bring water and wastewater services in Northern Ireland up to the highest possible standard both in terms of quality and cost.
"I am confident that over the next few years this investment will bring tremendous sustainable benefits to households, local industry, businesses and tourism."
NI Water's William Duddy, Director of Customer Services, said: "NI Water has earmarked a number of projects to begin within the next year to improve services provided to customers in the Omagh area.
"There is an urgent need to address the issues arising from the legacy of under-investment to enable us to match or exceed performance levels of similar UK water companies by 2015."
By 2010 NI Water will have invested £492 million in wastewater treatment and collection systems and £174 million in water treatment and storage systems.
(PR/JM)
