He was apparently beheaded by an English-sounding member of Islamic State in a video released last night.
The Archbishop said: "Our prayers and thoughts are with Steven Sotloff's family during this time and remember that he is both the latest most prominent recent victim and represents many who have suffered in that way."
In the video an I.S. extremist threatens to kill a British hostage unless US air strikes in Iraq are stopped.
Asked by Premier if this should change the government's stance on Iraq Archbishop Justin said: "I'm really not qualified to answer that except we pray for all of those being held hostage.
"I don't think anybody can underestimate the difficulties and the tensions faced by the heads of government at this time."
After a meeting with leaders from all sides of the Christian faith at Lambeth Palace the Archbishop of Canterbury spoke to reporters about the 'state of emergency' in Iraq.
Archbishop Justin said they disagreed over support for military intervention in Iraq and Syria where tens of thousands of Christians continue to be persecuted.
Asked by reporters about discussions on military involvement he said: "From the views we've had, there's a mixture of views, I don't think people are of one mind about that.
Archbishop Justin speaks at an Iraq prayer vigil
"We are aware that history has not been totally encouraging in that area.
"There are a mixture of views, some people feel that there needs to be more intervention at least to buy some time. Others feel that that would be wholly unhelpful."
He added that it was important Christians weren't forced out of the area: "The Middle East is in danger of 'losing part of its identity, heritage and culture.
"We are seeing an extreme religious ideology that knows no limits in its persecution of those who are culturally or religiously different.
"Those who promote this intolerance must be challenged and the perpetrators of violence held to account without impunity."
Following the meeting the Christian leaders joined other faiths at a prayer vigil in Westminster Abbey for peace in Iraq.
Muslim, Jewish and Christian leaders gathered to "stand together" in support of all minorities suffering in Iraq.
Archbishop Justin used a speech there to urge all faiths to work with each other to bring peace to the Middle East.
At the end of his press conference Archbishop Justin finished with a prayer.
"Our Lord and Heavenly father for whatever reason we've been drawn together here because of the suffering of hundreds of thousands of people.
"May you give grace and strength to those who suffer, courage to those who seek to help and wisdom in the resolution of this great tragedy and crisis.
"In Jesus name, Amen," he said.
Listen to his full press conference here: