Coopersknowe residents have complained the smell from the landfill site at Easter Langlee was worse than ever on Monday night - and is now filling their homes.
And they have threatened to withhold their council tax unless the local authority takes action.
One resident, who did not wish to be named, told the Border Telegraph: "It's ridiculous. I wouldn't go outside to light a match." And he added: "Now it's coming down the chimney into our house."
A spokesperson for the Scottish Environment Protection Agency (SEPA) said: "SEPA has received a number of recent complaints regarding odour issues associated with the site in question. The main odour problems have been attributed to excess landfill gas which is not being captured by existing collection systems. The operator has now submitted plans, which have been agreed by SEPA, to extend the existing landfill gas collection system in order to combat the problem.
"As an interim measure, SEPA requested the operator use an odour neutralising spraying system at the site which has been in place for the last few weeks. However, the system stopped working over the weekend which may have led to worse than normal odours. SEPA has been liaising with the operator and it is hoped the system will be fully functional again within the next 24 hours."
Scottish Borders Council insisted it was working with the Scottish Environmental Protection Agency to address the problem. Waste Manager Ross Sharp-Dent said: "A meeting is scheduled with local residents, which SEPA will attend."