The star's family have confirmed plans are under way for the record to go on sale later this year. Rafferty, whose famous hits include Baker Street and Stuck in the Middle with You, was working on the album when he died aged 63 in January 2011.
The singer, originally from Paisley, Renfrewshire, passed away from liver failure after a long battle with alcoholism.
His daughter Martha Rafferty, 42, is working with record producers on the new album. She said: "I'm going into the studio to listen to the demos that were to form the album of new material my father was working on before he died with a view to a release this year."
She also plans to make other unreleased songs by her father available on his official website in coming months.
She added: "I hope it will both introduce a new audience to the breadth and scope of his work and offer something new for the many fans already well acquainted with his music.
"The site will be added to and expanded over the coming months with an online shop dedicated to offering music and other memorabilia. The full catalogue of songs will be available, as well as completely exclusive and unheard material."
The announcement of an album of previously unheard tracks was met with delight by fans of the musician.
On the official Gerry Rafferty Facebook page Sam Johnson said: "Oh my gosh, this is so fantastic.
"It has been just the past few months that I've been able to complete my collection of his entire discography, and truly appreciate the depth and talent.
"I've had the pleasure of listening to his final four CDs for the first time during this period.
"Once I'd played them all, I was left with that empty feeling an eight-year old gets after the last Christmas present is opened...just wishing there was one more.
"And now I learn there's a present behind the tree I did not see. Thank you Santa."
Gerry Tweedie posted: "Great! The thought of having some new Gerry stuff gives me a nice warm feeling."
Brendan Henderson added: "Brilliant, miss his voice so much, would be a great legacy an album of new songs."