A pulsating gusset-ripper letter from James Joyce to his lover, Nora Barnacle, has been discovered tucked into a book among an almost painfully personal collection of relics linked to the author.

The letter, never seen by Joycean scholars and believed destroyed years ago, was written on December 1 1909. It will become one of the most sensational Joyce manuscripts to reach the open market when it is auctioned at Sotheby's in July.

It was the first response from Joyce, then in Dublin, to a sexually explicit letter that Nora wrote from Trieste, saying she longed to be "fucked" by him.

The couple had quarrelled bitterly about his jealousy and failure to provide for her and their family. She had threatened to leave him.

Her letter sparked a passionate exchange, and finally a reunion, which led to his writing the epic novel Ulysses, which is set in Dublin on June 16 1904, the day they first met.

The collection to be auctioned includes a telegram from Nora with the one word si (yes) - the last word of Molly Bloom's soliloquy and of Ulysses - and a purse like a religious reliquary which Joyce had made to hold it. It also includes his spectacles and his bronze medal for singing.

Peter Selley of Sotheby's said: "My hands were shaking when I held these things. These things are so personal and so closely related to Joyce's work their impact was extraordinary."

The family of Joyce's brother Stanislaus inherited the collection, which includes the only complete set of proofs of an aborted 1910 Irish edition of Dubliners, and a ballad in Joyce's handwriting.

The biographer Richard Ellman, who edited the letters, wrote at one stage that "Joyce's letter of 1 December 1909 has not survived". But it had been overlooked. The letter is expected to fetch as much as £60,000.