This award is said to be a stand in for the Nobel Prize for 2018, which was postponed by the Swedish Academy after a sexual misconduct scandal.
Canadian broadcaster CBC reported that Quebec-based author Kim Thuy, who has written several acclaimed novels like Man, Ru and Vi, has been shortlisted for the alternative prize.
Thuy told the Canadian press that she was surprised by the news and lauded her fellow finalists - French author Maryse Condé, Japanese author Haruki Murakami and American author Neil Gaman.
"I see them as cultural icons - veteran writers - while I'm just at the beginning of this adventure," she said.
The winner will be announced on October 12 and a formal celebration event will be held on December 9, the prize’s official website states.
The New Prize of Literature, created by the non-profit New Academy, originally featured 47 authors from around the world.
Four authors most voted for by the public are shortlisted for the grand prize, which will be decided by a jury panel.
The New Academy, which has over a hundred writers, journalists, actors and many other cultural figures, was created following sexual assault allegations against Jean-Claude Arnault, a member of the Swedish Academy, which traditionally awards the annual Nobel Prize of Literature.
The incident has prompted the Academy to postpone this year’s literature award. It will declare two winners for the literature award next year as compensation.
An academy website statement says: “The present decision [to postpone the award] was arrived at in view of the currently diminished Academy and the reduced public confidence in the Academy.
“We find it necessary to commit time to recovering public confidence in the Academy before the next laureate can be announced,” said Anders Olsson, the Academy’s interim Permanent Secretary.
The New Academy will be dissolved in December, making the New Prize of Literature a one-time affair.
“In a time when human values are increasingly being called into question, literature becomes the counterforce of oppression and a code of silence.
“It is now more important than ever that the world’s greatest literary prize should be awarded,” says a New Academy statement on its website.