Scottish Water was carrying out the works at Philiphaugh on the outskirts of Selkirk whilst laying new pipes between Howden and Yarrowford.
A Scottish Borders Council's archaeologist said:
"It is an exciting discovery. It is not every day that medieval villages are found - most of them are known, this one was completely unknown."
More top news
Cumbria Police have been praised for the way they work with victims of crime, according to a new report by HMIC.
A mental health ward in Kendal is to remain open until the outcome of a delayed public consultation into its future.
A look ahead at the forecast for the Border region.