With a nine kilometre stretch already completed, work on a second 14 kilometre stretch is now progressing.
"For a long time the natural environment and the health of residents in the vicinity of Hamilton Canal were seriously affected by waste from nearby houses and animal farms in the area," the economic development ministry said.
"As a result the new project has drawn the wholehearted supported support of the community."
Anew bridge is being constructed at Palliyawatte to solve the problems people faced in crossing the canal. Four foot bridges and nine main bridges are now being repaired for the benefit of residents.After meeting the requirements of tourists visiting the area, facilities for fishermen such as marketing stalls and jetties for boats will be constructed.
"The canal and its vicinity is of much environmental importance since the area is home to different species of fish, birds and plants and rich in bio-diversity, making it ideal for eco-tourism," the ministry said.
"In view of this, embankments will be built to protect the canal banks and either side of the waterway will be beautified.
The canal will be de-silted and future pollution will be prevented allowing for boat travel to from Negombo to places like Muthurajawela, Kelani Vihara and Dandugam Oya along Hamilton Canal with no difficulty.
Sri Lanka's King Vira Parakramabahu VIII, is said to have built the canal to trade in cinnamon and other commodities in the 15th century.
The Dutch improved upon it and the waterway is now called the Dutch canal, linking Kelani River with the Negombo lagoon to the east of Muturajawela.
In the early British period in 1802 British Revenue and Commerce Agent Garvin Hamilton had started a new canal, to the east of the earlier Dutch canal, to link it with a series of parallel canals.