Led by Durham Wildlife Trust, the scheme will see a preservation plan drawn up for the River Skerne.
It will include initiatives to protect natural habitats as well as industrial and agricultural sites.
If successful, organisers say a further £2.6m from the Heritage Lottery Fund will be unlocked as well as £500,000 from other sources.
The project, called the Bright Water Landscape partnership, covers 200sq km (77sq miles) and focuses on the River Skerne from Hurworth Burn reservoir in East Durham to South Park in Darlington.

Asif, 33, and Butt, 31, were banned along with Mohammad Amir after spot-fixing incidents during a Test against England at Lord's in August 2010.
Amir, 24, is back in the Test team but Asif and Butt are yet to be recalled.
"We are waiting for them to prove their case," said Pakistan Cricket Board chairman Shahryar Khan.
"They'll have to knock the door down before they are considered."
All three men were jailed for their parts in the incident, which saw Amir and Asif deliberately bowl no-balls as part of a betting scam.
Khan added: "Amir, from day one, has admitted his faults and apologised.
"The other two didn't admit from day one, only once they were sentenced by the court did they admit. There is a difference there."
Amir was given a muted reception at Lord's on Friday as he bowled for the first time in a Test since being banned.
A project to conserve a North East river catchment area has been awarded £223,000 of Lottery funding.
[NEXT_CONCEPT]
Mohammad Asif and Salman Butt have been told they must "knock the door down" before they are considered for a return to the Pakistan team.