The bill does not make a second referendum compulsory but is likely to be resorted to if Scotland is not on board with the deal Britain strikes for its exit from the European Union (EU).
Scotland had voted to remain in the EU in the June 23 referendum, in contrast with the rest of the UK which favoured Brexit.
The first referendum over Scotland's future within the UK took placein 2014, which saw voters reject independence by 55 per cent to 45 per cent.
It says that any future referendum would be held on a similar basis to the one in 2014. It is now open for a public consultation, which will run until January 11, 2017.
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Scotland's First Minister Nicola Sturgeon has said Scotland should be ready to hold a vote before the UK leaves the EU if it is felt necessary to protect Scottish interests.
British Prime Minister Theresa May has said she does not believe there is a mandate for another referendum on independence.
The UK government would then be asked to grant a Section 30 order to make the referendum legally binding.
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