The Queen conferred the peerage on Archbishop Williams upon his retirement from the See of Canterbury.
He will become a Baron for Life with the style and title Baron Williams of Oystermouth in the City and County of Swansea.
Archbishop Williams was nominated for the life peerage by Prime Minister David Cameron.
He is one of ten people the Prime Minister can nominate for Life Peerages each Parliament.
These are awarded to people who have given significant public service.
Archbishop Williams, who became the Archbishop of Canterbury in 2002, will retire from the role at the end of this year.
He will be succeeded by the Bishop of Durham, Justin Welby.