Developers are having the bodies exhumed and carried to Trent Park, Middlesex, where they will be reburied.
The site in Islington, north London, within the main shopping area, was once a Victorian graveyard. After the Closure of Burial Grounds Act in 1852 a timber yard was built over the thousands of graves and they were forgotten.
The site, off Upper Street, is now being redeveloped by Groveworld Ltd, which discovered the bodies after running tests in the area. Historical records confirmed the timber-yard was once a Victorian cemetery and that the last bodies were buried in 1852.
Peter Bonsal, head of parks and cemeteries at Islington council, said the bodies would be treated with reverence. "The development company have called in specialists to exhume the bodies," he said. The specialist company, Necropolis Co, said it was usual practice for bodies to be lifted out one by one and placed in containers. These containers would then be transported to the new site.
David Jenkins, of Necropolis, said: "The work we are doing in Islington is far less unusual than people might think. Mass exhumation is going on all year round, all the time." However, some nearby residents were concerned about diseases like smallpox which might have finished off the Victorians.
Dorothy Jones, who lives near the old entrance to the timber yard, said: "They died of horrible diseases in those days. They might be bringing them up with the bodies."