Reuters reports that the lyrics, which were scribed on the back of a radiophone bill, are to be sold to the highest bidder at Bonhams auction house in London.
The item is expected to fetch anywhere between $400-560,000 (£250-350,000) when it goes up for purchase on December 15.
The handwritten lyrics are to be sold with other personal items that belonged to Lennon, including two Ivor Novello Awards and a list of the rocker's monthly expenses from May 1968.
'I'm Only Sleeping' was first released on The Beatles' acclaimed 1966 LP Revolver and has since been covered by Suggs and The Vines among others.