The broadcaster said that Spears was offered an "insulting" amount of money to become a judge on the reality TV show but turned it down, with some reports claiming that the 'Til the World Ends' musician wanted twice as much.
Speaking on her morning talkshow The Wendy Williams Show, Williams said: "[Britney] has been allegedly offered $10 million (£6.4 million) to be a judge on X Factor, which is an absolute insult... to her. She turned it down because she wanted $20 million (£12.8 million) - good for you, Britney! It's insulting.
"You know why it's insulting? Because Jennifer Lopez is making $15 million (£9.6 million) on her show, Christina Aguilera makes $10 million... and Christina, I love you, take this the best way, but you are not the star that Britney is. You're just not."
Former Dancing with the Stars contestant Williams added: "I just feel like Britney Spears is like Bambi - everybody loves her, we've all seen her journey... people love Britney. Britney sells out concerts. Britney sells records."
It has also been claimed that Spears and Simon Cowell are locking horns over her desire for a one-year "exit clause".
A show insider said: "Simon Cowell wants at least a two-year commitment and Britney wants an out clause."
Beyoncé has also been linked to the X Factor role, but her father Matthew Knowles said that it would "never happen... it's not for her".
Watch Wendy Williams discussing Britney Spears on her talkshow below: