The 77-year-old has set out his ambitions for the show to be staged in his home town in 2021 if it wins the UK City of Culture crown for that year.
The Paisley-set show, Underwood Lane, would deploy around a dozen of Rafferty’s songs in a story tackling the religious divide in the west of Scotland.
Byrne’s story explores the friendship forged between two teenagers, Desi and Joey, who have grown up as near neighbours but have never met – before a chance encounter leads to them forming a band together.
Underwood Lane has echoes of both The Slab Boys, the stage show based on Byrne’s experiences working in a carpet factory in Elderslie, near Paisley, and Tutti Frutti, the television drama about the troubled reunion of a Scottish rock’n’roll band.
A host of Rafferty’s best-known songs, including Stuck In The Middle With You, Whatever’s Written In Your Heart, Baker Street, Night Train and Can I Get My Money Back, are expected to feature in Underwood Lane.
Byrne is working with Neil McArthur, the musical director on the National Theatre of Scotland’s stage adaptation of Tutti Frutti , and theatre director Robin Lefevre, who worked with Byrne previously on stage shows Writer’s Cramp and Threads.
Born in Paisley in 1940, Byrne has had a hugely varied career as a visual artist, a writer and a theatre designer since graduating from Glasgow School of Art in 1963.
Byrne said: “Underwood Lane is basically about two guys in Paisley who are exactly the same age as each other, in their late teens.
“They come from the same town and they actually live in houses which back on to each other on Darkwood Crescent and Underwood Lane.
“They don’t know each other because one goes to a Protestant school and the other goes to a Catholic school. But they know they are made for each other playing in a band.
“I think Underwood Lane is at least as good as Tutti Frutti. It’s definitely as dark and as funny as that was.”
Rafferty was among a number of musical figures who Byrne worked with when he became established as an artist, designing albums for the Paisley singer, as well as the Beatles, Billy Connolly and Donovan.
Byrne said: “Underwood Lane is where the Rafferty family lived. I knew Gerald, as I always called him, from when I was eight years of age and I worked beside his older brother Jim in Stoddart’s carpet factory.
“I saw him two days before he died after I was told he was on his way out. I went down to see him in Gloucester, where he was living with his daughter, Martha. We spent five hours laughing and reminiscing.”
Byrne added: “The script of Underwood could stand alone without any music in it.
“I didn’t write it to accommodate any of the songs – I just wrote it as a play. But it’s the songs that make the thing a complete work of art.”