General Fiction featuring knitting or yarn (according to Woolworks.org):
Art Work, A.S. Byatt
Knitting plays a major role.
At Home in Mitford (from the Mitford Years series), Jan Karon
The first in a series depicting everyday life in a small North Carolina town. Knitting is described at one point as a comfort to the soul.
Bag of Bones, Stephen King
The hero's wife is a knitter.
Cheerfulness Breaks In, Angela M. Thirkell
Plus other titles including The Brandons, High Rising, Marling Hall. Each of her books contains at least one knitting reference, often more.
Cold Mountain, Charles Frazier
Describes a sweater knit of unwashed fleece.
Coming Down from Wa, Audrey Thomas
Knitting at an African girls' school in the 1960s.
Coming Home, Rosamunde Pilcher
England during WWII with mention of Red Cross knitting.
Country of the Pointed Firs, Sarah Orne Jewett
A young woman's life in a New England seaside village, based on a diary from the late 1800s, with knitting references.
The cure for Death by Lightning, Gail Anderson-Dargatz
Mention of wartime sock knitting.
Death and the Oxford Box, Veronica Smallwood
Features knitting as one of the book's themes.
Fall On Your Knees, Ann-Marie MacDonald
Brief mention of sock knitting for the war effort.
The Fever Tree and Other Stories, Ruth Rendell
"A Needle for the Devil" is densely packed with knitting.
Green Dolphin Street, Elizabeth Goudge
High Island Blues, Ann Cleves
Very brief mention of knitting.
Independent People, Haldor Laxness, trans. J. A. Thompson
1946 Nobel-prize winner, mentions Icelandic knitting.
Jacob's Room, Virginia Woolf
Full of knitting references.
Lambs of God, Marele Day
Spinning and knitting in a cloistered religious community.
The Last Continent, Terry Pratchett
Knitting that doesn't fit is discussed in this novel set in Australia.
The Last Resort, Alison Lurie
Knitting mentions, including Kaffe Fassett sweater.
London Transports, Maeve Binchy
Includes an enlightened knitter.
The Man Who Loved Childen, Christina Stead
Knitting is a part of the characters' lives.
The Matisse Stories, A.S. Byatt
One of the stories is about someone obsessed with knitting.
McNally's Gamble, Lawrence Sanders
The main character's mother is portrayed as a ditzy knitter.
The Miss Read series, Miss Read
Many mentions of ladies' knitting, both good and bad (knitting, not the ladies!).
Mister Sandman, Barbara Gowdy
Entertaining knitting scenes.
Odd Woman, Gail Godwin
Knitting and recycling.
Persuasion, Jane Austen
Knitting for charity and as an amusement.
Plain Jane, Joan Barfoot
Main character is a knitter and book is full of knitting mentions, particularly sweaters she's knitting for a friend in prison.
Random Passage, Bernice Morgan
Mentions of knitting with rags in outport Newfoundland.
Roman Fever and Other Stories, Edith Wharton
A daughter's views of her mother's knitting.
The Shipping News, E. Annie Proulx
Lots of knitting references.
Small Ceremonies, Carol Shields
A mystery is created around a quantity of yarn found in a character's husband's desk drawer...since no one in the family knits.
Some Tame Gazelle, Barbara Pym
Many mentions of knitting as a part of ordinary life in her earlier books; fewer in the later ones.
Staggerford, Jon Hassler
Knitting and small town life.
Storm Tide, Elizabeth Ogilvie
Maine lobstermen talk of knitting bait bags and trap bags for lobster traps.
A Tale of Two Cities, Charles Dickens
Arguably the most well known knitting reference; not unusual for non-knitters to refer to a knitter as a Madame Defarge.
The Twisted Sword (The Poldark series), Winston Graham
The last book in this series includes a description of handknit stockings and gloves.
Was It Something I Said?, Valerie Block
Mention of knitting as therapy after a plane crash.
A World without Wool Shops, Dulan Barber
A wonderful description of wool shops.