The scheme is meant for supplying water for drinking and irrigation in the fluoride, famine affected areas.
Taking the decision of naming it after the Irrigation expert, Chief Minister K Chandrashekhar Rao signed the file.
The move comes as the first death anniversary of Late Vidyasagar Rao is soon approaching.
"He had communicated to the people in simple language the discrimination and injustices done to Telangana region in irrigation sector and created awareness among the people on several complicated issues," KCR said.
"His life's ambition was to provide safe drinking water to the fluoride affected Nalgonda district and provide water to the arid lands in the Telangana region," the Chief Minister added. (ANI)