President Felipe Calderon said the government would invest $21bn (£10.6bn) to expand supply networks and to improve drainage and water treatment.
The aim was to work for the sustainable development of Mexico, he said.
A key challenge is Mexico City, home to 20 million people, which suffers both water shortages and flash floods.
"There is an imbalance between the availability of water, population growth and economic development," said President Calderon as he unveiled the investment programme during a visit to the state of Hidalgo.
President Calderon wants to invest 21 billion dollars to improve drainage and water treatment throughout Mexico. Water drainage and water treatment are two of the bigget problems facing Mexico at this time due to poor water availability and flooding.
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