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
Our wet end to June continues.
25-year-old Calum Wilkinson who caused the death of a pensioner has told a jury: "I will carry that with me for the rest of my life."
Borders Forest Trust win at the 2017 Scotland's Finest Woods Awards for their work on Carrifran Wildwood in Moffat Hills.