The fibre network will be laid in the sewers
Dundee is to become Scotland's first internet "Fibrecity".
Fibre optic cables are to be put into the sewers, providing residents with high-speed connectivity and broadband.
The new system will be capable of providing speeds of more than 100 Mbps (megabits per second) to homes, businesses and organisations.
The technology, by company H2O, has already been used by the council and Dundee University, but should be available to 55,000 homes by 2010.
Work on installing the system will begin in early 2009.
Where the sewers are not viable, H20 will use a method which sees a small 20mm-wide slot channelled into the road to lay the cable.
Elfed Thomas, CEO of H2O Networks, said: "Dundee is the most densely populated city in Scotland, but this project will see us bringing connectivity to more remote areas as Fibrecity is an all inclusive solution.
"Many households and broadband customers have insufficient connectivity bandwidths because they are attached to legacy networks deployed in the 20th Century that just can't cope with demand.
"Our solution is a totally new network that does not try to connect old and new cables. With speeds in excess of 100 Mbps, it brings us right into the 21st Century and beyond."
Convener of Dundee City Council's economic development committee, Joe Morrow, added: "Dundee is already a recognised leader, not just in biotechnology and digital media, but in the use of technology to benefit its communities.
"I am sure that the plans revealed in this announcement will provide even more opportunities for the business community in Dundee to gain competitive advantage and to keep the city at the forefront of the broadband economy.
"This £30m private sector investment and other technological advances being pioneered in Dundee, cement the city's moves towards becoming a hub for information age products and services."