Sir Elton told Rolling Stone magazine that he thought the Piano Man singer's previous well-documented trips to rehab had been a waste of time.
The 63-year-old performer, who has been sober for years, said: 'I love you, Billy, and this is tough love.
'Billy, you have your demons and you're not going to get rid of them at 'rehab lite'. You've got to be serious. People adore you, they love you and respect you. You should be able to do something better than what you're doing now.'
He added: 'He's going to hate me for this, but every time he goes to rehab they've been light. When I went to rehab, I had to clean the floors. He goes to rehab where they have TVs.
'At the end of the day, he's coasting… I always say, 'Billy, can't you write another song?' It's either fear or laziness. It upsets me. Billy's a conundrum.
'We've had so many cancelled tours because of [his] illnesses and various other things, alcoholism.'
Joel, 61, responded in a statement today: 'I've worked with Elton for such a long time and I've enjoyed our relationship too much to let something as random as these comments change my affection for him. Elton is just being Elton.'