The app, which is optimised for iPhone and is built using HTML5 technology rather than as a native app, will offer readers the chance to buy individual articles and will give freelance journalists the opportunity to receive 80 per cent of the payment.
One of the aims of the app is to offer long-form, premium content in digital form.
Within a beta version of the app seen by Journalism.co.uk, it promises that Knitd "will help journalists – and other professional content creators – to self-syndicate their work".
"And it will allow consumers freedom and choice to build their own stream of premium content."
It adds that it "could revolutionise the way freelance journalists and independent publishers both operate and monetise their works".
The private beta version of the app is currently populated with example stories while those behind the app invite journalists to sign up as "content creators".
Content creators sign up for a Twitter-like handle, which starts with a tilde (~SarahMarshall, for example).
"We think this creates a unique identifier that could be put on emails, business cards and websites," James York, the publisher behind the new app, said.
"Our role is one of ecosystem manager and gatekeeper," he added.
Writers retain the copyright while "we create the free functionality for their simple interaction with consumers".
Writers, whether journalists, academics or other "content creators", set the price of each article, with Knitd taking 20 per cent commission.
The sample articles currently available are offered for various prices, with the two we tested in the private beta version of the app priced at £0.12 and £1.50.
Some articles are free and readers have the option of leaving a "tip" of up to £1 for the author.
The micropayment system uses PayPal, with readers using their account to buy articles.
Journalists are being invited to sign up and will be vetted before they are permitted to join. They will then receive a publisher login and will be able to post their own content.
Individual articles will not be selected or rejected by an editor, instead the journalist posts directly using his or her publisher login.
York, who is chief executive and is setting up Knitd with co-founder Richard Sams, hopes the app will go live with content in January 2013.
To sign up as a contributor go to the Knitd website. The Twitter handle is @knitd_official.
Last week Matter, a publication which offers long-form, investigative journalism launched, with individual articles sold for $0.99.
BBC technology reporter Dave Lee's article headlined Micropayments: Would you pay 20p to read an article?