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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Ross Hutchinson takes a look at the weekend forecast for the Border region.
The Government has announced a 16 million pound investment to electrify the Windermere rail line - but what are the benefits?
A look ahead at the forecast for the Border region.