This paper proposes a new method that uses free-field measurements of vertical/horizontal displacements and excess pore pressures to calculate the lateral loads on the piles due to embankment induced soil movements. The variation of lateral earth pressure K and the horizontal effective stresses are calculated and a constitutive relationship is proposed between lateral earth pressure coefficient and modulus of horizontal subgrade reaction. Using this relation the stiffness degradation of the soil with deformation is defined for the cases where piles are installed before or after the embankment construction.