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Knut was born as son of Kristin Nikolasdottir Blaka and jarl Haakon the Crazy.
In 1226, upon the death of the ribbung party pretender Sigurd Ribbung, Knut was chosen as the new pretender of the ribbung party. Knut was soon beaten militarily, resigned his pretender crown and made peace with king Haakon in 1227. He married Ingrid, daughter of jarl Skule Baardsson, whereby he became brother-in-law of his rival, the incumbent king Haakon IV of Norway.
As an effort to facilitate a compromise between Skule and Haakon, Knut's father-in-law Skule was given the title title Duke in 1237. Tensions between the two continued, however, and Skule rose to open revolt in 1239. He tried to win Knut over to his side by offering him the title of jarl. Knut rejected Skule's advances, and remained loyal to king Haakon, who subsequently elevated him to jarl. Skule's rebellion met its unsuccessful end in 1240 and the old duke was killed. After Skule's death, no one was able to challenge king Haakon's position in Norway.
For the rest of his life, Knut retained the title of jarl, making him, formally, the highest ranking man in the country after the king and his sons. Whether he held much real power over affairs of state is doubtful. In September 1261, he carried the crown at the coronation ceremony of Haakon's son, Magnus. He was then weak and infirm. He died in Bergen, later the same year, and was buried in the cathedral there. This cathedral was demolished in 1531; the site is today marked by a memorial.