This instruction was first included with the Freaks LP and has appeared on every Pulp album since*. Jarvis also included it on his first solo album.
* Except Separations which did not include the lyrics.
Jarvis offered this explanation during his Saying The Unsayable lectures on song lyrics:
If you read them whilst listening to the recordings you're extracting the lyrics from their natural habitat - when you read words from a page it's different to listening to them as part of a song. When you're listening to a song, the lyrics are subservient to the rhyme. Whereas if you read them off a page they have a natural rhythm.
He also had this to say in Pulp People Newsletter 32 -
Jarvis:
The ways in which you get to a final destination are really quite irrelevant; the important thing is when somebody puts something on the record player, what effect it has on them, and sometimes, actually knowing how something was done, can undermine that. I've always had that feeling, that's kind of partly the reason for that thing that I always put on the lyric sheet, the 'Don't read the words whilst listening to the record', because to me that makes it seem forced and the words are really kind of shoe horned into place.
Pulp People:
Even though people do it anyway?
Jarvis:
I know, they're so naughty.