The charity, which protects more than 2,000 miles of waterways in England and Wales, had worked for several years with Champollion. The agency was then acquired by Instinctif Partners in March, but the combined team has now lost that client following a competitive pitch.
Cavendish is also understood to have beaten Grayling in the final stage of the pitch process.
Cavendish will work with the charity's public affairs team, which is based in London and Milton Keynes, as well as its regional operations.
The account will be led by Cavendish director Gareth Morgan, reporting to the trust's head of comms, Ed Fox.
Fox said: "The Canal & River Trust is a big charity that is making a big difference to millions of people’s lives. We contribute to a considerable range of government agenda across England and Wales – from national initiatives on health, wellbeing, happiness and skills to regional projects such as the Northern Powerhouse and Midlands Engine.
"Communicating our work to politicians, policy-makers and influencers is a big task and we’re excited to have Cavendish on board to help us with the next stage in our journey."
The trust, which has nearly 1,700 staff, was created in 2012 when the assets of Government-owned British Waterways were transferred to it. Income of £189m last year came from a range of sources including of charitable income and donations, government funding, commercial income from boat licences and moorings and investments.