The funny man will record a special Christmas single with the original four members later this year.
Kay, 33, is a big fan of the group and has seen them live in concert six times. They got the idea when he popped backstage to meet Gary, Howard, Jason and Mark at their recent Manchester gigs.
Kay was in Tony Christie's video for the single (Is This The Way To) Amarillo for Comic Relief last year.
An insider said: "Pete is very excited. The boys want Pete to appear on the disc and play their manager in a video.
"It's his dream - he's always been a massive fan of the band. He's hardly Robbie Williams in the sex symbol stakes but the fans will love him."