Phnom Penh municipal authorities plan to restore the Stung Meanchey sewage canal, a rubbish-filled eyesore where residents face flooding, foul smells and health fears.
City Hall said the canal will be developed without the need to evict or relocate residents.
The announcement was made when City Hall leaders and officials went to check the canal and meet people living in the area over the weekend.
Action is being taken by authorities one year after Khmer Times published dramatic video footage showing the canal as a river of garbage.
The video, taken with a drone, was picked up by Reuters news agency and shown around the world.
Phnom Penh Governor Khuong Sreng said officials would carry out work to widen the canal on Thursday.
This might affect some residents with houses built over the canal, whom he asked to be patient.
City Hall will soon measure up land in the area for these people to move to, for which they will receive land titles. Mr Sreng said he would push for the project to be completed as soon as possible.
“We will work with the government and the Land Ministry to provide land ownership for the residents so they don’t have to worry about their houses,” he said.
They will not need to pay stamp duty on the land title transfer, he added.
Preliminary figures from citizen representatives show there are about 400 families in eight communities living beside the canal.
These communities are Stung Prak Meanchey, Stung Meas Meanchey, Samaky Meanchey Thmey, Sovannaphum Meanchey, Preah Chan Krahom, Strey Samaky Meanchey, Meanchey Strey Akpiwat and Sonsom Prak Dermbey Akpiwat.
Preah Chan Krahom community resident Horn Sokhon said locals support the development to create better living conditions, but are worried about the potential for forced evictions.
“If they can do it before the 2018 election as he promised, it is good,” she said.
Living conditions by the canal are difficult because of flooding below the houses and poor health from the bad smell, she said, even though efforts had been made to get rid of the rubbish every year.
Ms Sokhon urged the authorities to speed up the development, prepare the relevant infrastructure and provide land titles to people as soon as possible.
In early May, former Phnom Penh Governor Pa Socheatvong promised residents their communities would be developed.
He said the authority would prepare land plots for people measuring five metres by eight metres, with 1.5 metres at the front of houses and half a metre behind them.
Equitable Cambodia executive director Eang Vuthy said that in the past, people living along the canal have proposed plans to develop the area to City Hall and the Land Ministry.
It is a good thing if the authorities fulfil their development promise, he said.
He urged the authorities to have a formal written agreement with citizens, so people can have confidence in the government.