Half of the Monmouthshire and Brecon canal is likely to stay closed in 2008 following a breach which flooded houses in Gilwern, Abergavenny.
Part of the road in Gilwern was engulfed in mud
A structural assessment has been carried out and major renovation works are needed, British Waterways say.
Over the next six weeks the 16 mile stretch will be drained for more thorough investigations.
Local businesses have pledged their initial support to the scheme, said British Waterways.
Eight people were rescued and the A4077 between Crickhowell and Gilwern was closed for a week after the 200-year-old canal breached on 16 October.
Initial checks by British Waterways suggested that erosion caused the breach and it announced its intention to carry out a complete geo-technical assessment of the canal earlier this month.
Despite the impact the closure will have on local boating businesses, which run up to 50 boats on the canal, British Waterways say it will be the best way to secure the canal's long term future and its safety.
Julie Sharman, general manager of British Waterways Wales and Border Counties, said their main concern was that such businesses could survive the closures.
"We have been talking to them about how we can best assist them," she said.
"We have had an extremely supportive response from them.
"As local people they understand the canal as well as we do and they have been very supportive and positive.
Torrent of mud
"The problem with this was it was in a location where we weren't expecting such a significant failure. The important thing now is that we look to the future and we are committed to securing the future of this canal."
A group of homes were evacuated in Gilwern after the alarm was raised about the canal breach.
Three were so badly damaged by the torrent of mud and water that two families were evacuated to Gilwern Community Centre.
Twenty-three hire boats were also affected, with cranes brought in to help right them.