The digging Dog

I board and train dogs from my home and have had many diggers.......
You should be there to catch him digging and correct him. Don't get angry "after the fact" if he dug up a hole. He won't understand that it's an unwanted behavior unless he gets a clear signal when it's happening. All he understands is that the cool dirt feels great on his paws and he is not getting enough excercise to keep him relaxed and out of trouble so digging feels great and burns his excess energy too.
I do not reccomend encouraging the dog to dig elsewhere because it send a mixed signal about "digging"
You can also try spraying the area where he digs with a deterant or burying some of his poop in that area (sounds nasty but it works)
Do keep in mind that the best way to teach a dog is to supervise his behavior, correct the unwanted behavior and encourage alternate behaviors with rewards. Timing is ALWAYS key.
A dog that is getting enough excersise and simulation is more likely to stay out of trouble.

Our oldest lab was a digger as a younger dog but has quit as she aged;I made the most of it by putting in plants in the huge holes she dug...sometimes they stayed and sometimes she dug them out ....sorry I really don't have any ideas on how to stop them....Ijust made the most of what was a frustrating situation and she did grow weary of this....if you watch your dog and say NO! when s/he starts to dig and give them something to take their attention away or a treat for minding, that might work....good luck!