Stephen Cottrell's remarks capped off a turbulent end to the year for the Church, following the release of a report which accused it of covering up sexual abuse.
That prompted the resignation of Archbishop of Canterbury Justin Welby after he was criticised for not doing enough to stop a prolific abuser.
With Mr Welby opting to break with years of tradition and miss this year's Christmas services at Canterbury Cathedral, Mr Cottrell's remarks were closely watched.
Helen-Ann Hartley, who as Bishop of Newcastle has been a vocal critic of Mr Cottrell, described his sermon as "empty words. I have no words more than that to describe their meaning."
She has previously said he should resign as archbishop.
At York Minster on Christmas morning, the archbishop appeared to address criticism of the church directly.
He spoke of the need not just to talk about justice and love but to "walk the talk". Mr Cottrell also spoke of "the inadequacies of those who talk a good game, but whose words are never embodied in action".
"This Christmas, God's Church itself needs to come again to the manger and strip off her finery and kneel in penitence and adoration. And be changed," he said.
Other bishops have confronted the Church crisis head on in their Christmas messages.
The Bishop of Oxford, Steven Croft, who has faced his own calls to resign, spoke of "a crisis in confidence in many of our institutions, including in our own Church".
He said Christmas was a time to pause and take stock.
Mr Cottrell, who is set to take over many of the Church's leadership duties on 6 January when Mr Welby leaves his position, has faced calls to step down.
He has been under scrutiny over his handling of a priest in his charge, David Tudor, who had been barred by the Church from being alone with children but who for years remained in his post.
In November, the Archbishop of Canterbury resigned following a report that criticised his handling of John Smyth who abused more than 120 boys and young men.
The Church said Mr Welby would be spending "private time with his family" this Christmas.