The Suez Canal earns Egypt about $5 billion a year in revenues, a vital source of hard currency for a country that has suffered a slump in tourism and foreign investment since its 2011 uprising.
The new channel, part of a larger project to expand Suez port and shipping facilities, aims to raise Egypt's international profile and establish it as a major trade hub.
This giant project will be the creation of a new Suez Canal parallel to the current channel of a total length of 72 kilometres (44.74 miles), Mohab Mamish, chairman of the Suez Canal Authority, told a conference in Ismailia, a port town on the Canal. His comments were broadcast by state television.
He said the total estimated cost of drilling the new channel would be about $4 billion and be completed in five years, though Egypt will strive to finish it within a more ambitious three-year deadline.
The original canal, which links the Mediterranean and Red Seas, took 10 years of intense and generally poorly-paid work by Egyptians, who according to the Canal Authority, were drafted at the rate of 20,000 every 10 months from the peasantry.
It took weeks if not months off journeys between Europe and Asia, otherwise necessitating a trip round the tip of Africa.
Egyptian President Adel Fattah al-Sisi, a former army chief, said the armed forces would be in charge of the new project for security reasons. Up to 20 Egyptian firms could be involved in the project but would work under military supervision, he said.