The project, which is funded by the British Embassy in Israel provides children with education and football training.
Lambeth Palace staff, including the Archbishop were challenged to a game by the children.
The final result in Tel Aviv this morning was a nil-nil draw. Most seemed pleased, if a little surprised that a group of 12 year olds had fended off Lambeth Palace's best team.
Speaking later at the Peres Center for Peace Just Welby commented: "There's only one universal religion in this world and it's football. I wish that Christianity was as effective at reaching everybody. But we're not!"
Great to be with Jewish and Arab youth at The Equaliser coexistence football project in #Jaffa today - tough game though! pic.twitter.com/NmFPKZbqM2
— Justin Welby ن (@JustinWelby) May 11, 2017
He also said after the game "I was trying to avoid a Boris Johnson moment" – referring to when the now Foreign Secretary knocked over a small child during a rugby match in October 2015.
In the post-match commentary, the Deputy Ambassador at the British embassy in Tel Aviv Tony Kay remarked, "the first rule of diplomacy is let the kids win!"
When one of Welby's aides quipped "he's very good at sport", the archbishop hit back, joking "she just lost her job".
It later emerged the Archbishop recently had reconstructive surgery on both of his feet. But Welby wasn't to be hampered, instead making two key headers.
Before the match, Justin Welby joined the project's founder Liran Gerassi in handing out football shirts with the Lambeth Palace and British Embassy emblems to the children.
Justin Welby's Inter Religious Affairs Secretary Rev Mark Poulson said: "It's great to support a British-funded peace project," adding it was helping to prevent people from living "parallel lives".
