Bacterial capsules provide protection against environmental challenges and host immunity. Historically, Escherichia coli K serotyping scheme, which relies on the hypervariable capsules, has identified around 80 K forms that fall into four distinct groups. Based on recent work by us and others, we predicted that E. coli capsular diversity is grossly underestimated. We exploited Group 3 capsule gene clusters, the best genetically defined capsule group in E. coli, to analyse publicly available E. coli sequences for overlooked capsular diversity within the species. We report the discovery of seven novel Group 3 clusters that fall into two distinct subgroups (3A and 3B). The majority of the 3B capsule clusters were found on plasmids, contrary to the defining feature of Group 3 capsule genes localising at the serA locus on the E. coli chromosome. Other new Group 3 capsule clusters were derived from ancestral sequences through recombination events between shared genes within the serotype variable central region 2. Intriguingly, flanking regions 1 and 3, known to be conserved areas among capsule clusters, showed considerable intra-subgroup variation in clusters from the 3B subgroup, containing genes of shared ancestry with other Enterobacteriaceae species. Variation of Group 3 kps clusters within dominant E. coli lineages, including multi-drug-resistant pathogenic lineages, further supports that E. coli capsules are undergoing rigorous change. Given the pivotal role of capsular polysaccharides in phage predation, our findings raise attention to the need of monitoring kps evolutionary dynamics in pathogenic E. coli in supporting phage therapy.