Medieval bones were dug up yesterday by contractors working on a major improvement scheme for Oxford's Bonn Square.
Staff from construction firm English Landscapes, hired by the city council to clear and level the site, found skeletal remains from the 14th century burial site.
But the council said last night that archaeological work prompted by the discovery was not expected to hold up the building work, due to be completed this summer.
Earlier this month, the siege of Bonn Square came to an end when tree-top protester Gabriel Chamberlain came down from the branches after 11 days.
Protesters had been trying to stop the felling of trees before work began on the £1.5m redevelopment of the square.
Shortly after contractors moved on to the site, graves from the old burial ground were found, and yesterday further part of skeletons were discovered.
Council spokesman Chris Lee said: "I can confirm that some remains have been uncovered at Bonn Square.
"We have been given full permission by the Church of England to carry out work at Bonn Square.
"The redevelopment was designed so that during construction, as little disruption as possible would be made to the former burial ground on the site.
"We always knew that some remains would be uncovered during the development and an archaeologist is on site and working with us to carry out a full investigation.
"We will try to leave remains undisturbed on the site if they are uncovered."
Mr Lee added that the Oxford Diocese gave permission for the redevelopment of the square on condition that bones were reburied after examination by archaeologists.
A spokesman for Oxford Archaeology, based in Osney Mead, confirmed that staff were working in Bonn Square but no-one was available for comment.
An office worker overlooking Bonn Square said: "It looks as though the bulldozers have stumbled across some very old graves.
"We're looking down on one flat tombstone-looking lid and two brick-looking long shaped holes, which look like graves.
"It looks like they have dug up a fair few bones and even a skull."
In March 2004, when plans for the redevelopment were unveiled, the council was aware that discovery of medieval bones and dealing with them could delay their scheme.
As a result, council officers were forced to consult the diocese about disturbance to bones, because the land was consecrated ground.
Staff from English Landscapes declined to comment when the Oxford Mail visited the site yesterday.
In 2003, the county council had to spend an extra £300,000 to pay for an archaeological dig when hundreds of skeletons were found during redevelopment of the Oxford Castle site.