Israeli archaeologists in Jerusalem's Old City on Monday unveiled a newly unearthed section of the Western Wall and the first Roman public structure ever discovered in the city, they said.

Archaeologist Joe Uziel said he and his colleagues knew the wall section was there and had expected to find a Roman street at its base.

"But as we excavated and excavated we realised we weren't getting to the street. Instead we have this circular building," he told reporters in English at the underground site.

"Basically we realised that we were excavating a theatre-like (Roman) structure."

He said that carbon-14 and other dating methods indicated it came from the second or third centuries AD and appeared to be unfinished.

The Israel Antiquities Authority (IAA), which conducted the two-year dig, said that historical sources mentioned such structures but in 150 years of modern archaeological research in the city none had been found.

The section of the 2,000-year-old Western Wall uncovered by the diggers is about 15 metres (yards) in width and eight metres high, with the stones very well preserved.

It had been buried under eight metres of earth for 1,700 years, the IAA said.  

The Western Wall is the last remnant of the retaining structures which surrounded the second Jewish temple until its destruction by the Romans in 70 AD.

It is the holiest site where Jews are permitted to pray.

Previously, the last section to be exposed was in 2007, IAA chief Jerusalem architect Yuval Baruch said.

"Exposing parts of the Western Wall is of course extremely, extremely, extremely exciting, but the structure we are looking at right now we had no idea would be here," Uziel said, pointing to the 200-seat auditorium.

"It's probably the most important archaeological site in the country, the first public structures from the Roman period of Jerusalem," Baruch said.

Uziel said it was unclear if the building had been a meeting chamber for Roman administrative officials or a concert venue.