The Archbishop of Canterbury has insisted faith schools are not harmful to the cohesion of society.
Dr Rowan Williams told the BBC he welcomed the decision to scrap plans to make new faith schools take more children from other religions.
He said the government had shown there were concerns over integration "which faith schools have to play their part in resolving".
The government has been criticised for abandoning its plans over quotas.
Education Secretary Alan Johnson said he had dropped the idea after reaching a "voluntary agreement" with churches. But the government is now facing a battle in the House of Lords over the issue.
ENGLAND'S FAITH SCHOOLS
Church of England 4,646
Roman Catholic 2,041
Muslim 9 (expected)
Hindu 1 (expected)
In an interview for Radio 4's Sunday Programme, Dr Williams said concerns about the effect of faith schools on community cohesion were misplaced.
"I think it reflects the government taking faith schools seriously in their own terms while quite properly and very naturally saying, look, there are concerns about integration, which faith schools have to play their part in resolving," he said.
BBC religious affairs correspondent Robert Pigott said Dr Williams accepted some Muslims were reluctant to participate socially and culturally in British society - but believed the government was right not to try to address this by imposing legal quotas on schools.
'Path to madness'
Dr Williams said he also opposed any suggestion of legislation against the wearing of religious symbols.
He said the inevitable need to set legal limits over the size and style of things such as crucifixes or veils would be a " path to madness".
Mr Johnson's Tory predecessor Lord Baker has already told the BBC he will table an amendment to the education bill this week to reinstate the quotas plan.
He accused ministers of the "fastest U-turn in British political history".
But Mr Johnson has said he reached a deal with the Catholic Church and the Church of England to "ensure" they would reserve up to a quarter of places in their schools for children of other faiths or of no faith
Although the voluntary agreement does not affect Muslim schools, the Muslim Council of Britain welcomed it, with education spokesman Tahir Allam saying the compromise was "a good position to be in".
Lord Baker's spokeswoman said the peer's amendment, compelling new state-funded faith schools in England to take up to 25% of pupils from outside the religion, would be tabled on Monday.