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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Kerrie Gosney brings you Sunday night's forecast
Cold with wintry showers, risk of some snow and ice early Monday.
The Met Office have issued a warning for snow showers and icy strectches from Saturday evening until 10 am Monday