Corbridge in Northumberland was hit by Storm Desmond in 2015, with more than 70 homes evacuated as the River Tyne reached record levels.
Water drainage near Station Road and Tinklers Bank was now being improved, Northumberland County Council officials said.
Cabinet member Ian Swithenbank said the project was "vital".
"We've been working tirelessly since the severe weather last winter to clean-up and repair roads and infrastructure both in Corbridge and the wider area and this major piece of work will help protect the town in the future," he said.
A new outfall through Tynedale Rugby Club will replace a culvert badly damaged during the storms, the authority said.
Club chief executive Neil Foster said flooding at the ground seemed "insignificant compared to the impact on local residents".
"Hopefully this new surface water drainage system will reduce the risk of future surface water flooding, particularly in Station Road where flooding has historically been a problem," he said.
The work is expected to take up to four months.

In an interview with Empire, the actor and former California governor claimed that low ratings were due to President Trump's credit as executive producer.
He said he would like to work "on a show that doesn't have this baggage".
However, Mr Trump tweeted that Schwarzenegger "isn't voluntarily leaving".
He said the actor was "fired by his bad (pathetic) ratings", adding that it was a "sad end to [a] great show" - referencing his own previous tenure as its presenter.
As the row escalated, Schwarzenegger replied: "You should think about hiring a new joke writer and a fact checker."
The president - who left the show to run for the White House - has previously ridiculed his TV boardroom successor.
In Friday's interview, Mr Schwarzenegger claimed an anti-Trump social media campaign had impacted the ratings of the show, on which he debuted in January.
"When people found out that Trump was still involved as executive producer and was still receiving money from the show, then half the people [started] boycotting it," said the former Mr Universe.
"It's not about the show... because everyone I ran into came up to me and said, 'I love the show... but I turned it off because as soon as I read Trump's name I'm outta there!'
"It's a very divisive period now and I think this show got caught up in all that division," he said, adding that he would decline if asked to host again."
Mr Schwarzenegger has often clashed on Twitter with Mr Trump.
Last month at the National Prayer Breakfast in Washington DC, Mr Trump mockingly asked people to "pray for Arnold... for those ratings".
He said the show had been swamped "in comparison to the ratings machine, DJT", using his own initials.
The show, whose 15th season ended last month, averaged fewer than five million viewers per episode.
New York real estate businessman Mr Trump became a household name as the show's host for 14 seasons.
Some 20 million Americans were regular watchers in its first year before the viewing figures tapered to six million for Mr Trump's last episode.

The female swan had a netted bag, used to hold footballs, wrapped around her head and wings at Wyken Slough nature reserve in Coventry.
She remains at Wychbold Swan Rescue, near Droitwich, Worcestershire, following Saturday's rescue.
The RSPCA said fishing line and hooks were also "dangerous hazards".
The swan, which had been seen struggling to keep her head above water, sustained damage to one of her wings and remained under observation on Friday.
RSPCA inspector Helen Smith said the swan was "in complete shock" when she was rescued by members of the West Midlands Fire Service.
"She could have been struggling to free herself for some time and was clearly exhausted," she said.
"The netting... was so tightly wrapped around her body she was in real danger of drowning."
The RSPCA inspector reminded members of the public about dangers to wildlife and wild birds.
She said: "Netting, litter and fishing line and hooks are dangerous hazards to wildlife and I urge people to think of the consequences before they casually discard such items."
Work has started on new flood prevention measures for a repeatedly flooded village.
[NEXT_CONCEPT]
Arnold Schwarzenegger has quit The New Celebrity Apprentice, saying it has become tainted by Donald Trump's involvement.
[NEXT_CONCEPT]
A warning has been issued about the dangers of discarded netting and litter after the rescue of a swan which was in danger of drowning.