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
Three brothers from Cumbria have become the first people to swim across the two biggest and most powerful whirlpools in the world.
A man involved in a violent burglary while on police bail for leaving a baby home alone has been locked up by a judge
The weekend is hours away - and if you are in Cumbria you have the bonus of it being a Bank Holiday.