"The church has not been good at dealing with homophobia," the Most Rev. Justin Welby told a gathering of leaders of the Evangelical Alliance, representing Great Britain's 2 million evangelical Christians.
"In fact, we have, at times, as God's people, in various places, really implicitly and even explicitly supported it -- and that demands repentance," he said.
"And we have to be really, really repentant about that because it is utterly and totally wrong," the symbolic head of the worldwide Anglican Communion told the group at the dedication of a new headquarters.
Welby, 57, opposed letting gay couples adopt children when he was a young priest.
On the eve of his installation as archbishop March 21 he told the BBC he adhered to the traditional Anglican doctrine defining marriage as a relationship between a man and a woman and said he opposed gay and lesbian weddings in church.
Last month he voted against a bill in the House of Lords allowing same-sex marriage in England and Wales. The bill ultimately passed in Parliament.
He said Wednesday he didn't regret his vote against the Same-Sex Marriage Act.
"No, I am happy that I voted against it," he said. "It seemed to me that the bill was rewriting the nature of marriage in a way that [conflicted] with the Christian tradition, with scripture and with understanding."
But he said he was not yet "clear" on the wider issues and acknowledged the Anglican Church was "deeply and profoundly divided" over gay marriage, despite its strong official opposition.
Noting he was speaking on the 50th anniversary of Martin Luther King Jr.'s "I Have a Dream" speech, he urged Christians to speak out about what they favored rather than simply what they were against.
"And we have seen changes in the idea about sexuality, sexual behavior, which quite simply [mean] we have to face the fact that the vast majority of people under 35 think not only that what we are saying is incomprehensible but also think that we are plain wrong and wicked, and equate it to racism and other forms of gross and atrocious injustice," said Welby, who joined the church's evangelical wing as a young man during an 11-year career in the oil industry.
Public-opinion polls suggest most Christian young people, including young, born-again evangelical Christians, disagree with the church's traditional line on homosexuality, Welby said.
"I'm continuing to think and listen very carefully as to how in our society today we respond to what is the most rapid cultural change in this area that there has been -- well, I don't know if ever -- but for a very long time," he said.
"We have to be real about that, I haven't got the answer and I'm not going to jump one way or the other until my mind is clear about this," he said.
Ben Summerskill, chief executive of British gay rights charity Stonewall, told The Daily Telegraph he found it "a tiny bit rich to say he has great sympathy for gay people when in the 10 years since the introduction of civil partnerships, the church has doggedly refused to bless people's long-term partnerships, even though they are happy to have services for pets."