Based on Williams’ novel The Siege of Trencher’s Farm, it featured graphic scenes of violence and a notorious rape scene - not contained in the book - which led one commentator to dub it a "a running sewer disgorging human waste".
British censors later banned it from being released on video - a ban that was only overturned in July after a high profile campaign.
With a video release now set for October 7 and the reissuing of his novel to follow next year, the Paisley-born writer saw the film earlier this month, for the first time since its release, and was pleasantly surprised. "I always thought it was neo-Nazi crap," he said. "But being a lot more divorced from the shock of seeing what had happened to the book, it was actually much better than I thought. I think it really is very powerful."
Despite his reservations about the violence in the film, his planned sequel, appears to involve as much murder and mayhem as the original. Although not yet written, the plot is already well-formed. "It will involve some of the same characters, the same setting.
"It’s revenge for what happened. I can’t give away any more, somebody is out for revenge. Somebody has waited quite a time. I can’t go any deeper than that. It would give it away."
Although he now lives in London, the sequel will be eagerly awaited in Scotland where authors and commentators have wondered where Williams - once regarded as one of the nation’s most promising literary talents - disappeared to.
His book From Scenes Like These was shortlisted for the inaugural Booker Prize in 1969 and Walk: Don’t Walk, a hilarious novel about being a big-name drunken Scot in America, received strong critical acclaim.
But Williams later turned his back on films and novels and made a living ghost-writing newspaper columns and autobiographies for football stars, teaming up with Terry Venables to write a series of novels about a London private detective called Hazell. It was turned into a hit television series in the late Seventies, but by the end of the Eighties Williams had virtually vanished from the literary scene.
The news that a new novel could be on its way has been welcomed by authors and film fans alike.
Ian Rankin, author of the Inspector Rebus novels, said: "I knew about Gordon Williams and I knew about the book and somehow never got hold of it. Even when I eventually saw the film, which was about 1978 or 79, when I was old enough to see it, the book didn’t seem to be very easily available.
"Walk: Don’t Walk is one of the best books ever about life on the road as an author. I read that at university and loved that."
TV Screenwriter John Brown, whose credits include Taggart and Morse, regards Straw Dogs as one of the best films ever made: "If he brought out the sequel as a novel, I would certainly get hold of it."
The sequel might not be too long in coming either - Williams wrote the original Siege at Trencher’s Farm in just nine-and-a-half days.
"My idea was - could you take a group of ordinary people and turn them into murderers by eight o’clock tomorrow morning."
Hollywood paid big money for the story and Williams was consulted about directors for the film and suggested Alfred Hitchcock or Roman Polanski. He was pleased with the idea of Sam Peckinpah, the director of The Wild Bunch.
But the two never met and Williams saw a draft script only when an acquaintance auditioned for a role. He was horrified by the American dialogue and his criticism found its way into print.
But Peckinpah got his revenge. "The contract said what size my name would be, but it didn’t say where, so he moved it to the very end of the movie," Williams said. "I’m sitting there with my wife, this is my big moment, the Hollywood film, the big time, and there was my name and every single person in the cinema had their backs to the screen, rushing to the exit."
One aspect of the film, however, he did like: the title. Film company executives feared The Siege of Trencher’s Farm sounded like another western and Peckinpah took the enigmatic ‘Straw Dogs’ from a book of Chinese philosophy, which suggested fate treated people like straw dogs.
"It’s obviously memorable," said Williams. He hopes to use the word ‘Straw’ for the sequel. Revenge on Peckinpah could still be his.
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