The shortlist for the Whitbread Book Awards includes 2004 Booker winner Alan Hollinghurst for The Line of Beauty.
Hollinghurst will start as early favourite
He is up against literary stars such as previous Whitbread winner Kate Atkinson, and Orange Prize winner Andrea Levy in the novel category.
The Whitbread shortlist features 20 books in five categories including children's, poetry and biographies.
A winner is chosen in each category who then compete for the overall Whitbread book of the year title.
Category winners will earn £5,000 and be in with a chance of winning the overall prize of £25,000.
The first novel category features the much-touted Jonathan Strange and Mr Norrell by Susanna Clarke, which made the Booker longlist but not the shortlist.
Also competing in the category is Richard Collins for The Lands as viewed from the Sea, Susan Fletcher for Eve Green and Pano Karnezis' The Maze.
Louis de Bernieres' Birds Without Wings makes up the four-strong shortlist for novel of the year.
Susanna Clarke was a surprise omission from the Booker shortlist
Scott Pack, product manager at Waterstones, believes Jonathan Strange and Mr Norrell has the potential to repeat last year's contest when Mark Haddon's The Curious Incident of the Dog in the Night-Time was missed off the Booker shortlist but won the Whitbread.
"Haddon's book was the 'people's choice' for the best book of 2003 as the public went on to buy over four times as many copies of The Curious Incident of the Dog in the Night-time than the Man Booker 2003 winner Vernon God Little," said Mr Pack.
"This year, we have another book that fits this profile in Susanna Clarke's Jonathan Strange and Mr Norrell, which was also missed off the shortlist of the 2004 Man Booker Award but has already sold almost 60% more than Alan Hollinghurst's The Line of Beauty.
He added: "If Susanna Clarke goes on to win this year's Whitbread Book of the Year Award, it will be the second year that the Whitbread has championed the book that the public have been voting with their feet for."
All the authors featured in the children's category this year are women.
Among the books vying in the section are Meg Rosoff for How I Live Now and Annie Cassidy for Looking for JJ.
The biography category features a diverse range of subjects including Mary Queen of Scots by John Guy and poet Stephen Spender by John Sutherland.
Competing in the poetry category are Leonita Flynn, John Fuller, Matthew Hollis and Michael Symmons Roberts.
The winner of each category will be announced on 6 January and the book of the year on 25 January.
The shortlist in full:
Kate Atkinson - Case Histories
Louis de Bernieres - Birds Without Wings
Alan Hollinghurst - The Line of Beauty
Andrea Levy - Small Island
First novel shortlist
Susanna Clarke - Jonathan Strange & Mr Norrell
Richard Collins - The Land as Viewed from the Sea
Susan Fletcher - Eve Green
Panos Karnezis - The Maze
John Guy - My Heart is my Own: The Life of Mary Queen of Scots
David McKie - Jabez: The Rise and Fall of a Victorian Rogue
John Sutherland - Stephen Spender
Jeremy Treglown - VS Pritchett: A Life
Leontia Flynn - These Days
John Fuller - Ghosts
Matthew Hollis - Ground Water
Michael Symmons Roberts - Corpus
Children's book shortlist
Anne Cassidy - Looking for JJ
Geraldine McCaughrean - Not the End of the World
Meg Rosoff - How I Live Now
Ann Turnbull - No Shame, No Fear