Building work starts on Monday 5 July and worship will continue at Waterloo's other Anglican church – St Andrew's in Short Street – until the restoration of St John's is completed next year.
"After 10 years of fundraising and a year's delay due to Covid, we are thrilled that work is finally to begin on site," said Canon Giles Goddard, the vicar.
"St John's opened in 1826 to serve a burgeoning population of working people on the South Bank. During the Second World War, a firebomb devasted the nave but services continued, and the crypt provided shelter.
"In 1951, St John's was restored and rededicated as the official church of the Festival of Britain. Now, in the wake of the pandemic, we need more than ever for our magnificent grade II• church to be here for everyone, a place where we can come together to grow and to heal."
The restoration scheme has been designed by Eric Parry Architects, the firm that worked on the renewal of St Martin-in-the-Fields at Trafalgar Square.
Eric Parry said: "The overall vision for St John's Waterloo is one of creating the open door, the welcome, the space for different uses from the informal to the formal, and to enable the capacity for solemnity on the one hand and celebration on the other.
"The project is wonderful because of the simultaneity and diversity of people involved and because these spaces are able to deliver a sense of tranquillity and introspection in a world that is so manic and so stressed, their value is enormous and this is why this project is so important."
The scheme includes a permanent home for The Bridge at Waterloo, St John's employment training project, as well as improved meeting rooms and better toilets.
Almost all the £5 million project cost has been raised and St John's is making a final appeal for the remaining £150,000.
A list has been drawn up of ways in which donors can choose to be associated with the restored church from naming a room to being remembered for a windowpane. Other donor rewards include the use of the church for an event, vespers by candlelight for you and your friends, or a vicarage tea.
Lambeth Council is allocating £800,000 from section 106 contributions paid by developers of local schemes.
Recently, St John's was awarded a grant of £30,000 from the London Community Energy Fund to install 114 solar panels on the roof.
Canon Goddard added: "St John's may be closing until next spring but we're still here for you.
"Everyone is welcome to drop in and see us at St Andrew's (just off The Cut) and our beautiful churchyard garden at St John's will continue to be open for everyone to enjoy."