The book, believed to be the most widely read English work, was found by Jeffrey Miller, an assistant professor of English at Montclair State University in New Jersey, inside a 400-year-old notebook.
The manuscript was hidden among the papers of Samuel Ward, one of the men commissioned by King James I to translate a new version of the Christian text into English in the early 17th century.
Miller realised that the notebook contained text from the very book that Ward had been commissioned to help translate, 'Live Science' reported.
"Then I realised rather he was creating the King James Bible in that moment," Miller said.
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Miller said the notebook is not just the earliest draft ever found, but it is also the only surviving draft written in the hand of one of the original translators.
"Ward's draft alone bears all the signs of having been a first draft, just as it alone can be definitively said to be in the hand of one of the King James translators themselves," Miller wrote in the Times Literary Supplement.
Miller was familiar with Ward's handwriting from his intense study of the translator's texts.