David Peace, whose The Damned United was made into a film by Les Miserables director Tom Hooper, will publish Red Or Dead in August.
Peace's book about Clough led to a successful legal action by Johnny Giles, a former Leeds player, and subsequent editions of the 2006 work had to be altered to remove references to Giles the player found offensive.
However, Red Or Dead is expected to paint a positive picture of the Liverpool manager, from Glenbuck in Ayrshire, in the new novel.
Peace, who has also written the critically acclaimed GB84, about the miners' strike, and the Red Riding Quartet, said: "I have written about corruption, I have written about crime, I have written about bad men and I have written about the demons.
"But now I have had enough of the bad men and the demons. Now I want to write about a good man. And a saint. A Red Saint.
"Bill Shankly was not just a great football manager, Bill Shankly was one of the greatest men who ever lived.
"And the supporters of Liverpool Football Club, and the people of Liverpool the city, know that and remember him."
He added: "But many people outside of football, outside of Liverpool, do not know or do not remember him. And now, more than ever, it's time everybody knew about Bill Shankly. About what he achieved, about what he believed. And how he led his life. Not for himself, for other people."
The novel will cover Shankly's rise from obscurity with teams including Workington Reds and Carlisle United to his dominance of English football with Liverpool and his retirement in 1974 having led the club to league and cup success.
Shankly, who started his working life as a coal miner, died in 1981 and is widely regarded as having laid the blueprint for decades of success at Anfield.
He became a manager after he retired from playing in 1949, taking charge of Carlisle United, Grimsby Town, Workington and Huddersfield Town, before becoming team manager of Liverpool in December 1959.
Liverpool were then in the Second Division and he rebuilt the team into the major power in English football they remain today. He led them to the Second Division Championship, gaining promotion to the First Division in 1962, before going on to win three First Division Championships, two FA Cups, four Charity Shields and one Uefa Cup.
Shankly retired from football a few weeks after Liverpool won the 1974 FA Cup Final.
The Scot was known for his wit and obsessive drive to lead Liverpool to success. He once said: "Some people believe football is a matter of life and death, I am very disappointed with that attitude. I can assure you it is much, much more important than that."
Lee Brackstone, from Peace's publishers Faber, said: "A novel about one of the great good men of British football comes as such a tonic and a wake-up-call in these days of extraordinary wealth, privilege and abuse of both in the Premier League.
"There quite simply could not be a better time, culturally and politically, for this novel."