The singer, also known as Johnny Rotten, detailed the show proposal in a witness statement recently submitted to officials at London's High Court as part of a legal dispute regarding director Danny Boyle's upcoming series "Pistol", which chronicles the controversial group's rise to fame.
Lydon is currently being sued by his former bandmates, guitarist Steve Jones and drummer Paul Cook, for refusing to licence their music for the project, which is based on Jones' 2016 memoir, "Lonely Boy: Tales From a Sex Pistol."
In the court papers, Lydon recalled being approached by "The Crown" bosses about using the Sex Pistols hit "God Save the Queen", and having the rockers featured in a season three episode disrupting the celebrations of Queen Elizabeth II's Silver Jubilee in 1977.
Explaining why he turned down the potentially lucrative payday, Lydon wrote, "[The] producers of 'The Crown' wanted to distort the history of the day and depict me as a political protester and to show scenes of protest in front of the Queen in the middle of her jubilee celebrations. Events that simply did not happen."
He went on to describe the distortion of the truth as "an infuriating issue", because the Sex Pistols actually staged their protest on their own boat on the River Thames in London two days before the Queen's 25th anniversary procession on board her own vessel.
"The producers agreed to use film footage of the [Sex Pistols] boat trip instead," he continued. "But, the story that they presented with the Queen in despair in her carriage, and all those ugly scenes on the streets of crowds fighting and chucking bottles, whilst others were celebrating the Queen [sic]."
"Nobody was rioting and here is my real serious problem with it. This never happened. This is a lie to history, it's a lie about history, of the Sex Pistols' history."
The scenario was subsequently scrapped from The Crown's storyline. Producers for the hit TV drama series have yet to comment on Lydon's claims.