The closure is causing traffic tailbacks and drivers heading towards Reading are advised to take a diversion down Denmark Street, along Wellington Road and up Station Road.
Drivers wishing to access Rose Street coming from Reading should travel along Rectory Road, Wiltshire Road, Peach Street and Cross Street.
The works will continue for seven weeks until the end of March.
South East Water said it hopes to be able to operate a one-way system and will have details next week.
The work is part of the company's £2m scheme to upgrade the town's water system. The company has so far laid more than 4km of new water mains around the town.