Villas-Boas claims the youth system in England needs a revolutionary change and wants to see a replica of Spain where for example Barcelona's 'B' team play in the second flight just below the Primera Liga.
Football League chief operating officer Andy Williamson said: "The suggestion that Football League clubs should become feeder clubs to a select handful of elite clubs is frankly offensive to the hundreds of thousands of people that watch competitive professional football in our competition every weekend."
He added: "These are senior professional football matches that matter - they are not just platforms for developing other clubs' players.
"The Championship is the fourth most watched league in European football and crowds in our three divisions comfortably outstrip equivalent competitions in all of the other major footballing nations.
"One of the main reasons for this success is that our clubs are constituted as sovereign entities which represent their town or city with pride, rather than being a subsidiary of another club in another part of the country."
Villas-Boas said on Thursday the only way to ensure a conveyor belt of young talent for the first team was to revolutionise the structure of English football. He claimed B teams should play in the lower leagues rather than the elite clubs acquiring smaller ones as feeder clubs.
The Chelsea manager said: "There is more of a cultural identity if it's called a 'B team'. What happens in Barcelona is a good model in terms of competitions. They promote talent.
"If your B team plays in the Championship where they are fourth or sixth and threatening, playing good football, you'd call them up. There is an ease to call them up, and it could be a great benefit because you don't have to work with a 26-man squad, but a 19-man squad and just recall the best young guys with constant activity.
"The reserve team, for all the hard work, is not competitive. It serves the first team, but it doesn't serve the progression of talent coming through. The youth development system in England is not right."