Hi, I am making a large square cake (white) and the customer wants this particular wool pattern on top of the cake. Any recommendations on how to best to do this would be greatly appreciated :)

The following should give you the technique you need to pull it off:

http://cakecentral.com/a/how-to-make-a-knitted-sweater-cake-with-collar-and-bow

I'd try to use the smallest tip you have.  Good luck!

Have you considered an edible image?

Yeah I've thought about it but I am not fond of it, worst case scenarion I will use it but I figured something out. There is an artist here in Iceland who uses this pattern on candles, fancy bags and so on and I found this image which made me remember that I had this exact bag in my closet, I cut it down so now I can use it as a guideline or stencil somewhat, thought I could first cut out the black outlines by just cutting the bag like that and cutting the fondant accordingly, then when the black is all over I could use the white and cut it again like that and then finally the black in the middle. Don't you think that will work? :)

I don't know if this will help, but it might:

http://veganyumyum.com/2007/06/knit-night-cupcakes/

Also, I found this:

http://www.autumncarpenter.com/products/product.aspx?product=59

the one on the bottom right is supposed to be a knit pattern. I can't really tell from the picture.

From her blog: "Fabric set includes, plaid, argyle, knit, crocodile, stripe and houndstooth."

I have another idea.  You could copy it like this cake using just dots.  This cake was done to copy the traditional Greenland costume which is a knitted cape.

http://cakecentral.com/g/i/1474184/a/1475184/this-cake-was-made-for-a-woman-from-greenland-inspired-by-the-traditional-national-womens-costume-took-a-very-long-time-to-make-all-those-dots-all-decorations-are-royal-icing-cake-is-covered-in-fondant/