The Asian Development Bank said Monday it had approved an $80 million soft loan to Nepal to improve the chronically poor water supply for nearly three million people in the Kathmandu valley.

The money will go on expanding the network to improve access to piped water and ensuring the supply is of a better quality and at a higher pressure, the bank said in a statement.

The project will run alongside an ongoing $300 million scheme to bore a 26-kilometre (16-mile) tunnel through a mountain to bring in water from the Melamchi river, more than doubling the supply to the valley.

"The project will prioritise underserved areas and poor sections of the population in Kathmandu valley," said Manoj Sharma, of the ADBs South Asia Department.

"Piped water through individual connection will relieve women of the drudgery of collecting water, giving them more time for social and economically productive activities."

The Kathmandu valleys population has been growing at more than six percent annually in recent years but lack of water sources and underinvestment has left many households with inadequate, low quality supplies which pose health risks, the ADB said.

Under the new project additional reservoirs will be built while the infrastructure will be repaired and expanded to provide a 24-hour supply in at least 10 percent of the most needy areas.

The loan, which accrues interest at one percent a year, has a 32-year term with an eight-year grace period.

The government of Nepal is providing $50 million for the project, due to be completed by the end of 2016.