Lord Bourne, the peer responsible for faith issues, heaped praise on the clergyman and said he was "held in great respect".
The Archbishop of Canterbury had been quoted by the Daily Telegraph earlier this month revealing that he once told a senior Government minister he would be labelled an extremist under the government definition.
In an interview with Premier Lord Bourne said "that's certainly not the way we see it".
"I've heard him say that, I certainly don't think that," he said.
"He's a very distinguished person who has a massive contribution to give, and is giving, and brings his unique blend of insight to the issues that are very important to the government so the government holds him in great respect."
He added: "As regards to the government's view to the Church of England and of the Archbishop of Canterbury and all the bishops who participate in debates on a daily basis in the House of Lords they're held in great respect, not just by the government, I think in fairness, by all politicians.
"At Westminster they have a massive contribution to give".
Archbishop Justin had warned that a basic lack of "religious literacy" within the Government was causing problems.
He said: "The Foreign Office, the Ministry of Defence, our Government generally, is desperately trying to catch up, to understand a world in which they have no grip on what it is to be religious at all; where religious illiteracy is prevalent and extremely destructive of understanding and where they can't see really the difference between an extremist Muslim group like the Muslim Brotherhood and a sort of conservative evangelical group in a Church of England church.
"They assume they're a bit bonkers."
