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."
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Emma Jesson brings you Saturday night's forecast
Christmas Eve which could be rather frosty, and at present, Christmas Day itself looks like being cold and clear with a few wintry showers
There is a bit of everything on the way this weekend. Here is your forecast: