Experts believe that they have uncovered the remains of a medieval city which disappeared 700 years ago near Trellech in Monmouthshire.
Excavations on the site have already revealed two houses
Archaeologists have unearthed two buildings dating back to the 1200s.
Historical evidence shows that one of the largest settlements in Wales during 13th century is somewhere in the area.
But archaeologists have said the exact location has never been pin-pointed, and they hope that the excavations have revealed the lost city.
Stuart Wilson, who is part of Monmouth Archaeological Society, said he was convinced the dig would reveal further evidence of the city's existence a few miles south of the present-day village of Trellech.
"For a long time, we thought the city was near the church in the village," he said.
"But we found nothing during our excavations so we started looking elsewhere."
Groups of volunteers have unearthed the remains of two dwellings which they think could be part of the 400-house city, undetected for the past seven centuries.
"I say it's a city because it had so many more burgages [houses] than Cardiff at the time of its existence," said Mr Wilson.
"The first house we found dates to 1250 but we have found evidence that there was a serious fire which destroyed it."
Mr Wilson said they came to the location of what they think is the buried city by studying the landscape for tell-tale dips and flats which suggested that houses had once been there.
They began an excavation and discovered the remains of ancient walls which turned out to be houses.
Chairman of the society Stephen Clarke said he was "convinced" the remains were those of the lost city.
"We believe that it was an alien town set up by the Norman French and that in 1296 there was a battle where the Welsh destroyed it," he said.
Pieces of pottery have been found
"And this is backed up by the evidence of the fire.
"It has been absolutely amazing to find it because for 30 years we were looking for it in the village.
"But we could find nothing on any of the digs we made and now it looks as though we are right on top of it."
It is thought that the settlement housed workers for the iron industry of the area - society members have described it as being the "Medieval Merthyr".
Stuart Wilson is so convinced that they have located the town that he has even bought a field which is believed to have hundreds of the lost city's homes buried in it.