Fifty boreholes, costing between pounds 15m and pounds 20m, will extract 70 million litres of water a day in a bid to bring down the water table which is rising by up to three metres every year.
The scheme was unveiled yesterday by Thames Water on behalf of a group of organisations which includes the Environment Agency, the Association of British Insurers, BT and London Underground.
If nothing is done, the foundations of some of the capital's tallest office blocks could be affected by rising water levels within a decade. The water level is now only 40 metres beneath Trafalgar Square.
The borehole plan could be replicated in other cities in the United Kingdom, including Birmingham and Manchester.
Bill Alexander, chief executive of Thames Water, said: "There is no time to waste. Though the rising groundwater threat in London is the most immediate, it is a problem affecting other cities in Britain and around the world, so we can lead the way for others to follow."
From the mid-19th century onwards the water table in London fell by more than 90 metres as industries extracted their own water. Since the demise of brewing and engineering firms in the capital, water levels have risen substantially.
The plan to combat the problem will be implemented over the next five years.
A borehole is planned for the Millennium Dome in Greenwich where rising groundwater would be used to flush the toilets. Other boreholes have already opened at Streatham and Merton and work has started at Islington, Battersea and Brixton.