Construction crews have started work on a major irrigation infrastructure overhaul that will save thousands of megalitres of water while making roads safer in Griffith and Leeton.

The $62.2 million Urban Channel Pipeline project will replace ageing open channels with modern underground pipes across 14 kilometres of the two Riverina towns, with work already underway in Leeton, Griffith and Yenda.

Funded by the Australian Government and delivered with NSW under the Resilient Rivers program, the project promises to recover more than 2,675 megalitres of water annually – much of which will flow back to environmental programs in the Murray-Darling Basin.

Murrumbidgee Irrigation chief executive Brett Jones said the pipeline project builds on the recent completion of the company's network automation upgrade.

"This isn't the end of our modernisation journey, it's really just the beginning of the next stage," Jones said. "We're always looking for ways to support our irrigators and improve how we use this precious resource."

The aging channels being replaced have long been a headache for local councils and motorists. Open waterways running alongside roads create safety hazards, complicate drainage and require constant maintenance.

"Enhanced road safety is a big win for these communities," said Steven Porter, MI's general manager for asset performance delivery. "Getting rid of these roadside channels will improve drainage and cut down on road maintenance costs."

The project is being rolled out in stages, with three contractors already working across the region on the initial 14-kilometre section. Tenders have closed for the next five-kilometre stretch covering Bilbul and Beelbangera.

Local contractors are being prioritised for the work, providing employment opportunities in regional communities that have faced economic challenges in recent years.

The pipeline upgrade forms part of broader efforts to modernise irrigation infrastructure across the Murray-Darling Basin, balancing the needs of farmers with environmental water requirements.

For residents in affected areas, MI engagement officers will be making contact to discuss the construction timeline and explain connection options for properties currently served by the open channel system.

The project represents a significant investment in regional infrastructure, promising long-term benefits for water security while supporting the federal government's commitment to environmental water recovery in Australia's largest river system.