The news comes despite homes being ruled out at an inquiry six years ago.
It is understood campaigners fought a lengthy campaign to stop construction at Netherbarns, however the local authority has listed the site across from the River Tweed as a possible development.
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Planning officials say Historic Scotland has withdrawn its objections and Galashiels may need to expand.
Pressure group Save Scott's Countryside, led by former Borders Councillor and Borders Party leader Nicholas Watson, led the opposition to the housing plans.
They were finally rejected in September 2007 after a Scottish Government inquiry.
The following year, the land was included as a potential site for new schools, but the plans never progressed.
The latest draft local plan has raised the prospect of housing being built there once more.
(JP/CD)
