Jack Straw, a British government minister, provoked heated debate earlier this month by saying Muslim women who wore full veils made community relations difficult.
Williams said on Friday: "The ideal of a society where no visible public signs of religion would be seen, no crosses around necks, no sidelocks, turbans or veils, is a politically dangerous one.
"It assumes that what comes first in society is the central political 'licensing authority', which has all the resource it needs to create a workable public morality."
A number of European leaders have said the wearing of full veils presents difficulties for their nations with Muslim communities and immigrants needing to integrate into Western societies.
Following Straw's remarks, Tony Blair, the British prime minister, called the veil "a mark of separation."
The question of whether Britain is doing enough to integrate Muslims has been a major priority for the British government since British-born Muslim suicide bombers killed 52 people in attacks on London's transport system in July 2005.
But some Muslims say there is increasing "Islamophobia" in the country.
Williams said: "The proverbial visitor from Mars might have imagined that the greatest immediate threat to British society was religious war, fomented by 'faith schools', cheered on by thousands of veiled women and the bishops' benches in the House of Lords."
Last week, a British employment tribunal ruled a Muslim teaching assistant had not been discriminated against when the school where she worked asked her to remove her veil.
Earlier, a British Airways worker said she was sent home for refusing to conceal a small Christian cross while on duty.