"The injury is one that can't be operated on immediately," manager Brian Laws told the Scunthorpe Telegraph.
"The knee has to be immobilised for four weeks and we are then looking at a 14 to 16 weeks recovery period.
"It's a massive blow to Andy - and a massive blow to us too."
United have moved quickly to bring in a replacement, snapping up free agent Steve Foster who left Doncaster Rovers by mutual consent last week.
Butler joins Nathan Stanton and Lee Ridley in the treatment room as United's defensive resources become fully stretched, but Stanton is just two weeks away from a return according to Laws.