In a dramatic assessment of the state of the country, Justin Welby said there is a danger of a "schism" in society that the most vulnerable are falling into.
The Anglican leader issued a plea for Britons to be "generous" in adapting to newcomers to the country and called for people to show "care for each other".
In an article for the Mail on Sunday, he raised concerns about the Government's austerity drive.
Mr Welby wrote: "Brexit has divided the country - and now we need a new narrative. One that is rooted in all that is best in our history - solidarity, courage, aspiration, resilience and care for each other.
"There is a danger that there is a schism in our society into which the most vulnerable are falling. Austerity is crushing the weak, the sick and many others."
Mr Welby, who backed the Remain campaign in the EU referendum, called for tolerance.
He said: "Welcoming strangers to our own country and integrating them into our own culture is important.
"We must be generous and allow ourselves to change with the newcomers and create a deeper, richer way of life."
The Archbishop also called on the Government to tackle the housing crisis and warned of the importance of creating new communities.
He added: "We must build proper homes - and have a housing policy that is about creating communities, not just bricks and mortar."
At a press conference attended by Premier last week, Archbishop Justin said he felt "genuinely positive" about the future as the UK reassesses its identity and values as it leaves the European Union.
Speaking ahead of the launch of his new book, Reimagining Britain, he said some politicians have some "exciting ideas" for what this will look like.
Premier's Alex Williams contributed to this report.
Stay up to date with the latest news stories from a Christian perspective. Sign up to our daily newsletter and receive more stories like this straight to your inbox every morning.
