The water will travel via three routes - eastern, middle and western. The eastern route, work on which started in December, will feature a 1,156km canal from Yangzhou City in Jiangsu to Shandong and is designed to carry 8.9 billion cubic metres of water a year from Yangtze River tributaries. The first stage is to be completed by 2007.

The middle route will comprise a 1,267km canal which will move 9.5 billion cubic metres of water from the Danjiangkou Dam to Beijing and Tianjin.

Workers will start adding an extra 14.6 metres in height to the 162-metre dam later this year, giving it a total capacity of 29.05 billion cubic metres.

The first stage of this construction is expected to be completed by 2010.

The difficult western route will run from the mountain plateaus of Qinghai, in the headwaters of the Yangtze, to northern regions such as Gansu, Shaanxi and Shanxi. It is still being planned, but work is scheduled to begin in the next 10 years.

Proposed by Mao Zedong in 1952, the project is the world's largest water distribution scheme and will feature some of the most complicated engineering ever seen, including tunnels through mountains and under rivers.

The need for the vast project, which is being managed directly by the Standing Committee of the Politburo, is clear according to Zhang Guoliang, Ministry of Water Resources' project director.

'Our nation's water shortages are getting serious,' he said. 'Our nation needs this project and we must do it quickly.'

The northern regions are facing a water shortage crisis after years of drought and over-use. The annual per capita water use of the 440 million people living in the Yellow-Huai-Hai River basin - which stretches from the Shandong coastline to central-western Henan - is only 462 cubic metres, well below the internationally accepted benchmark for water shortages of 1,700 cubic metres.

Officials said the project would ease the water shortages in the Yellow-Huai-Hai River basin and improve environmental and economic conditions by restoring wetlands and introducing critical flood control.

Mr Zhang said the completed project would provide direct economic benefits of about 55 billion yuan a year.

The desperate need for water has meant the project has met with far less opposition than the Three Gorges Dam.

The only real challenge was from Hubei province which wanted more compensation for the middle diversion.

'It's hard to find people in the country against this project,' said one Beijing-based Western government official.

But, despite general support for the scheme, it is not without controversy. There are potential pitfalls that could turn it into a colossal disaster.

At risk is the environment, which could suffer badly when water tables are significantly lowered, not least by reducing the ability of the waterways to cleanse themselves.

In Wuhan, Hubei's capital city where the Hanjiang River flows into the Yangtze, environmental experts are worried about the effect of the middle route taking out an annual eight billion cubic metres of water.

Zhang Wanshun of Wuhan University's College of Resources and Environmental Sciences is concerned about the river's ability to flush out the massive pollution flows released by the thousands of factories and industries along the tributaries.

'We all know this is going to have an impact on the Hanjiang. But we just don't know by how much,' Professor Zhang said.

The reduced flows could increase the frequency of toxic red algae blooms on the Yangtze near the confluence with the Hanjiang River. There have already been three blooms this year.

Another environmental problem involves the eastern route and its plan to divert north the Yangtze's eastern tributaries.

These waters are some the nation's dirtiest, taking in an estimated 2.951 billion tonnes of waste water and 135,000 tonnes of ammonia and nitrogen each year.

There are also the human costs. The expansion of the Danjiangkou Dam will require the forced resettlement of 330,000 people.

Then there is the question of corruption. Water projects are notorious for graft. A recent government investigation reported about 880 million yuan in water project funds had either been misused or embezzled in the past three years.

The project has also been criticised for the lack of public debate, with the government being accused of rushing approval. Some international water experts believe the project is simply not worth it.

'China faces real challenges in meeting its growing water needs, but the huge economic, social and environmental costs do not justify its development at the moment,' said Peter Gleick, a water expert and director of the US-based Pacific Institute for Studies in Development, Environment and Security.

Others said the north's water shortages were mostly caused by overuse, a problem which could be tackled with higher water fees and strict rationing. Government officials and others involved in the project dispute these charges. They say minimising the project's environmental impact has always been a top concern. They say the project's water diversion flows on all routes will be adjusted according to ecologically safe levels.

Planners said they originally sought to divert 14 billion cubic metres in the middle route, but dropped this to eight billion cubic metres because of water quality concerns over the Hanjiang River.

Pollution concerns also forced a planned highway along the middle route to be scrapped.

To ensure water quality on the Jiangsu to Shandong eastern route, officials said they would spend about 32 billion yuan on 369 new cleanup projects.

These will include hundreds of new waste water treatment plants and the closure of polluting factories.

To prevent corruption, officials are pledging strict monitoring of funds. The State Council is expected to issue a new law detailing offences and penalties.

Officials rejected charges that there had been a lack of consultation. 'We have listened to everyone's opinions. All decisions were based on a consensus of all parties,' project manager Mr Zhang said.

Other officials insisted the project had been debated seriously for more than 10 years and as a result, its current form was nothing like the original proposal. Planners also said they were using the project to implement other water conservation measures.

Du Ying, director-general of the State Development Planning Commission's department of rural economy, said the price of water in cities such as Beijing and Tianjin would increase from the current three yuan per cubic metre to five yuan. The price rise was intended to make people save water, Mr Du said.

It might appear the planners have thought everything out, but those charged with implementing the plan tell a different story.

Han Jinyu, director of the Danjiangkou City Environmental Protection Bureau said: 'The planners give us all these demands. If we could achieve their targets, the nation wouldn't have any environmental problems, would it?'

The bureau is in charge of the Danjiangkou Dam's water quality. When the dam renovation is completed, its staff of 90 will be responsible for more than 29 billion cubic metres of water.

But Mr Han is worried because the dam is surrounded by hundreds of highly polluting industries, such as paper mills and cement factories.

Many of the factories, particularly private ones, often ignore pollution standards. Tomorrow: the resettlement programme.