According to the present invention, tunnels, particularly shallow tunnels, are constructed by excavating slurry filled cross-trenches in a direction transverse to the axis of the tunnel and at regular intervals along the line or axis of the tunnel. Prefabricated frame elements are inserted into the cross-trenches to, in essence, create the tunnel wall lateral support structure before the tunnel walls are installed. Then the tunnel sidewalls are excavated under bentonite clay or mud slurry to form cross-slots between the previously installed support frames. Precast concrete sidewalls or panels are inserted between the support frames. The frames and sidewalls have interlocking tongue and groove or keyway structures so as to interfit and lock same into position. When the sidewalls are in place, the roof of the tunnel may be either cast in place and then the soil excavated to form the actual tunnel and then the floor cast or the tunnel may be excavated down to the floor or invert level and then the floor or inverts cast and then the roof cast.