Prince William - who is president of the Football Association - told the England team that "we're all rooting for you" when he visited St George's Park in Staffordshire, after presenting the players with their tops.
Welsh star Sheen, 53, then said on Twitter: "He can, of course, support whoever he likes and as Pres of FA his role makes visit understandable – but surely he sees holding the title Prince of Wales at same time is entirely inappropriate? Not a shred of embarrassment? Or sensitivity to the problem here?"
The Prince later said that he was "supporting both" the English and Welsh teams, who will meet in the World Cup.
Sheen has now waded back in as he addressed a tweet from the Jeremy Vine Show, which asked: "Was Michael Sheen right to criticise Prince William for handing tops to England’s football team and not Wales?
"Sheen says it’s insensitive to leave out the Welsh team when he’s the Prince of Wales – but he’s also the president of the FA.
"Is this criticism fair?"
The Good Omens actor said: "I didn’t say it’s insensitive to leave out the Welsh team.
"For those who care the issue is that the title Prince of Wales seems inappropriate to be held by anyone not Welsh and this is just an instance of the absurdity. It’s not about supporting England or Wales or both."
He went on: "The title PoW was first given to the heir to the English throne by his father the King as a sign of dominance over a defeated Welsh people.
"The ‘tradition’ can be continued or not on the whim of whoever inherits the throne.
"Many Welsh people feel it should be ended."
"It’s entwined with so much of our history and how many of our present day challenges have evolved since then that it can be for many an issue that holds much more than just it’s surface meaning," he added in another tweet.
Watch: Michael Sheen gives passionate speech to Wales football team