Butland, who plays for Rangers, was due to start between the sticks against Celtic on January 2.
However, those plans were scuppered after he was admitted to hospital on New Year's Eve due to an 'internal bleed.'
Butland remained in hospital overnight before he was discharged on Wednesday.
The 31-year-old has since provided an update on his condition via Instagram.
"I really appreciate the messages, but it's important the information is correct," Butland wrote.
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"I've suffered a significant bleed to my leg that needed hospital attention, thankfully that's now under control and will lead to a full recovery sooner rather than later.
"Needless to say it's come at an awful time and I was fully focussed on helping us as a club.
"The most important thing now is supporting the lads and focussing on getting fit again as soon as possible.
"Let's stick together and push on @rangersfc."
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A Rangers statement said: "Rangers can confirm goalkeeper Jack Butland will miss tomorrow's Old Firm match with Celtic.
"The goalkeeper suffered an internal bleed in his leg which required hospital treatment, but he has since been released and is recovering.
"Everyone at Rangers wishes Jack a speedy recovery."
It means Rangers back-up goalkeeper Liam Kelly, who joined in the summer, will make just his second appearance for the club against bitter rivals Celtic.
Butland joined Rangers from Crystal Palace in June 2023 and has gone on to make almost 90 appearances for the Scottish giants.
However, the 31-year-old is yet to register a win against Celtic since the move.
In the seven Old Firm derbies he has been involved, Butland has drawn once and lost six times to the Hoops.
He has also conceded 15 goals across those seven matches, with the heaviest result being a 3-0 loss to Celtic earlier this season.
Rangers go into the contest in second place in the Scottish Premiership, a significant way behind their rivals.
Celtic are currently firmly in control of the title race with a 14-point lead on Philippe Clement's side.
Rangers were perhaps slightly fortunate the gap to the Hoops isn't larger as they came from behind to draw 2-2 against Motherwell last Sunday.
Apostolos Stamatelopoulos and Tawanda Maswanhise had given Motherwell a two-goal cushion inside the opening 45 minutes.
But mass changes at half-time inspired Rangers' comeback as Hamza Igamane bagged a second-half brace to secure a point.
The contest was not without drama as Motherwell had two goals ruled out, one of which involved Butland.
Motherwell's Tony Watt rose to challenge Butland as a cross came in and the Rangers gloveman ended up punching the ball into his own net.
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However, the referee deemed Watt had impeded Butland and chalked the goal off.
The decision left Motherwell boss Stuart Kettlewell furious and it ultimately led to him being sent off as he picked up two yellow cards in quick succession for his protests.