The Israeli Antiquities Authority said on Saturday the ruins are believed to date back to the third or fourth centuries, and include references to Jesus and images of fish, an ancient Christian symbol.
"This is a very ancient structure, maybe the oldest in our area," said Yotam Tepper, the head archaeologist on the dig.
The remains were found two weeks ago, while excavations were being carried out prior to issuing building permits for a new wing of the Megiddo prison, in northern Israel, which houses security prisoners.
Scholars believe Megiddo to be the New Testament's Armageddon, the site of a final war between good and evil.
Tepper said the discovery could shed new light on an important period of Christianity, which was banned by the Romans until the fourth century.
"Normally we have from this period in our region historical evidence from literature, not archaeological evidence," he said. "There is no structure you can compare it to, it is a very unique find."
Channel Two television, which broke the story on Saturday evening, broadcast pictures of a detailed and well-preserved mosaic bearing the name of Jesus Christ in ancient Greek and images of fish.
Pietro Sambi, the Vatican's ambassador to Israel, praised the find as a "great discovery".
"Of course, all the Christians are convinced of the history of Jesus Christ," he told Channel Two. "But is it extremely important to have archaeological proof of a church dedicated to him? Certainly."
Images of fish, an ancient Christ-
ian symbol, have been found
Joe Zias, an anthropologist and a former curator with the Israeli Antiquities Authorities, said the discovery was significant but unlikely to be the world's oldest church.
He said there were no churches until Emperor Constantine legalised Christianity in the fourth century.
"The earliest it could be is fourth century and we have other fourth-century churches. I think what is important here is the size, the inscription and the mosaics," he said.
"I think it is an important find as far as early Christianity but I wouldn't say it was the oldest church in the world."
The earliest churches, dating from around 330 CE, are the Holy Sepulchre in Jerusalem, the Nativity in Bethlehem and the Alonei Mamre near Hebron.
But they contain only scant remains of the original structures, which were built by Emperor Constantine I.
Prison or church
The Antiquities Authority said more than 60 prison inmates took part in the dig in recent months. Channel Two said there is speculation that Israel may move the prison and open a tourist attraction in its place.
"If it's between a prison and a church, I would like a church," Zias said. "You can put a prison anywhere."
"If it's between a prison and a church, I would like a church. You can put a prison anywhere"
anthropologist and former curator with the Israeli Antiquities Authorities
Israeli Tourism Minister Avraham Hirshzon said the discovery could greatly increase tourism to Israel.
"If we nurture this properly, then certainly there will be a large stream of tourists who could come to Israel. There is great potential and together with the evangelical centre in the north could bring great strides in tourism," he told Channel Two.