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
The final public consultation event on plans for a controversial new nuclear power station in west Cumbria is being held today.
Work to remove gravel from the River Kent in Kendal around Miller Bridge is continuing.
A report into how and why Appleby flooded during Storm Desmon is being discussed at a public meeting in the town tonight.