The film, which was penned by Russell and the original writer Bill Osco, will go ahead in his memory, according to The Hollywood Reporter.
Russell was due to direct the film before his death in November at the age of 84.
Russell's wife Elize Tribble will participate in the production of the movie with Renaissance Media Entertainment and "assist the team in bringing forward the production" of the musical remake.
Renaissance Media founder Stuart Young said that Russell brought "an incredible creative intensity and passion to Alice" during their six-month collaboration.
"We want to make a film that keeps true to Ken's unique perspective for the project," Young added.
Osco's original erotic retelling of the classic Lewis Carroll children's book was released in 1976 and has since become a cult classic. The film cost $500,000 to make, and went on to gross over $100 million.
A director is currently being sought. Shooting is expected to begin on Alice in Wonderland in 2012.
> Ken Russell 1927-2011: Life in pictures
> Ken Russell 1927-2011: Obituary
> Ken Russell: 5 essential films from the controversial director - video