Renfrewshire Council's Mark Macmillan has written to the musician's daughter Martha offering to create an exhibition in Paisley Museum and Art Galleries.
Ms Rafferty, 42, told fans on Facebook that she had sent items, including the handwritten lyrics to the star's biggest hit, Baker Street, to be sold by Bonham's. Rafferty died in January 2011.
Councillor Macmillan said: "We would like to offer Martha the chance to put her father's memorabilia, including the handwritten lyrics of Baker Street, on permanent display in Paisley Museum. Gerry is one of Paisley's most famous sons and it is only right we celebrate the man and his talent with a permanent exhibition."
Councillor Macmillan added he had no doubt Gerry Rafferty fans would love to be able to see the memorabilia on display.