THE largest Neolithic village ever found in Britain has been discovered within the Stonehenge world heritage site.

The village dates back to the period when Stonehenge was built - leading archaeologists to believe that the people who lived in the houses probably constructed the world-famous monument.

Excavations at Durrington Walls revealed the enormous ancient settlement that once housed hundreds of people, less than two miles from Stonehenge.

The findings, announced this week, help confirm a theory that Stonehenge did not stand in isolation but was actually part of a larger religious complex used for funerary ritual.

Durrington Walls is the world's largest known henge - an enclosure with a bank outside and a ditch inside, usually thought to be ceremonial - and only small areas have so far been investigated by archaeologists.

Eight of the houses' remains were excavated in September 2006 in the Stonehenge Riverside Project, led by Mike Parker Pearson, of Sheffield University, and five other archaeologists.

Dr Parker Pearson said: "English Heritage's magnetometry survey had detected dozens of hearths - the whole valley appears full of houses.

"In what were houses, we have excavated the outlines on the floors of box beds and wooden dressers or cupboards."

In a separate area outside Durrington Walls, two other Neolithic houses were discovered, each surrounded by a timber fence and a substantial ditch.

Isolated from the others they are thought to have been dwellings of community leaders, chiefs or priests living separately from the rest of the community or even shrines or cult houses used for rituals.

The rest of the houses are clustered along a stone-surfaced avenue connecting the remains of a colossal timber circle with the River Avon.

The avenue is very similar to one at Stonehenge and indicates that people once moved between the two monuments using the river.

Dr Parker Pearson believes that Durrington's purpose was to celebrate life and deposit the dead in the river for transport to the afterlife, while Stonehenge was a memorial and even a final resting place for some of the dead.

He also believes that Neolithic people came from all over the region to Durrington for massive midwinter feasts - abundant animal bones and pottery unparalleled elsewhere in Britain at the time support this idea.

Dr Parker Pearson and team member Julian Thomas of Manchester University believe Durrington Walls was built in wood as it was intended to gradually rot away, whereas stone was chosen for Stonehenge to ensure a lasting monument to the ancestors.

"Durrington appears very much a place of the living," said Dr Parker Pearson. "In contrast no-one ever lived at the stone circle at Stonehenge, which was the largest cemetery in Britain of its time."

Stonehenge is thought to contain 250 cremations.

The Stonehenge Riverside Project is run by the universities of Sheffield, Manchester, Bournemouth, Bristol, University College London and Cambridge.