The £2m engineering work will involve building a new sewer pipe under Forbury Road, which is expected to remain open, and Blagrave Street, which will be closed to traffic throughout, from July 2. It is due to be completed by November.
Thames Water's head of programme delivery, Andrew Popple, said the sewer collapsed six months ago and replacing it will be "an incredibly complex" job due to the depth of the pipe and extent of the damage.
He added: "This area of town has already suffered disruption from a water mains replacement project last year and the road has recently been resurfaced, but this is an unavoidable and unexpected job. We have got our best engineers on the case working to get this work done as quickly as possible with the minimal amount of disruption."
Reading Borough Council transport leader, Cllr Tony Page, said the local authority has a good working relationship with Thames Water and will support the utilities company in whatever way it can while the "important and unavoidable" work takes place.
He added: "We are pressing Thames Water to get this work started and finished as soon as possible so that there is no effect on Christmas trading. We will continue to monitor the progress of the works throughout this project."
Reading Buses chief executive, James Freeman, has warned passengers to expect disruption but said details of how services will be affected are still to be finalised. He added: "Hopefully, the vast majority of our customers will remain unaffected by the works."
Thames Water is holding a public information drop-in session at Reading Town Hall on Monday, 1.30-6pm.