Two building materials firms have agreed to deliver sand and gravel by barge as part of a UK Government-backed effort to relieve road congestion.
Under the deal, nearly half a million tonnes of sand and gravel will move through the canal network between Denham and West Drayton in west London over the next seven years.
Canals are now mainly used for leisure pursuits
The contract, the first major canal freight deal in 30 years, will take an estimated 45,000 lorry journeys off the road network.
It follows an extensive infrastructure upgrade on a five-mile stretch of west London's canal network, backed by grants worth nearly £500,000 from the Department of Transport and the London Waterway Partnership.
"We would like to see greater use of sustainable alternatives to road freight because of the real environmental benefits these can bring," said Transport Minister David Jamieson.
According to British Waterways, the company which manages Britain's 2,000-mile canal network, there is "great potential" for canal freight deals with construction and waste disposal firms.
The government's effort to re-establish the waterway network as a freight transport route comes amid rising concern over traffic congestion, with some experts warning that the UK's roads face gridlock if the problem is not tackled.
They are calling for greater use of road tolls and car share schemes, as well as efforts to make rail transport cheaper and more reliable.
Canals were originally built for freight transport in the eighteenth and nineteenth century, but have been superseded by road haulage.
The waterway network is now used mainly for leisure activities such as boating holidays.