The SNP’s foreign affairs spokesman at Westminster said using the term was “an own goal of massive proportions” in a column for the Courier and Press and Journal newspapers.
Prime Minister David Cameron has expressed frustration at the BBC for referring to the terrorist organisation as Islamic State, urging the use of the prefix “so-called” or the term Isil, the abbreviation of the title Islamic State of Iraq and the Levant.
Mr Salmond backed French foreign minister Laurent Fabius’s plea for the use of the Arabic name Daesh.
The former first minister and SNP leader said: “We should start by understanding that in a propaganda war then language is crucial.
“Any description of terrorists which confers on them the image that they are representing either a religion or a state must surely be wrong and an own goal of massive proportions. It is after all how they wish to refer to themselves.
“Daesh, sometime spelled DAIISH or Da’esh, is short for Dawlat alIslamiyah f’alIraq wa alSham.
“Many Arabic-speaking media organisations refer to the group as such and there is an argument it is appropriately pejorative, deriving from a mixture of rough translations from the individual Arabic words.
“However, the real point of using Daesh is that it separates the terrorists from the religion they claim to represent and from the false dream of a new caliphate that they claim to pursue.
“It should become the official policy of the Government and be followed by the broadcasting organisations.”
Mr Salmond said Foreign Office advice that Tunisia’s beaches were safe looked “hopelessly complacent” after 38 people were killed when a gunman opened fire on tourists in the resort of Sousse on Friday.
He said: “For every hundred or even thousand plots that are foiled one will surely escape the net.
“That is not an argument for not having an effective security net just a realisation that the real battle is one for hearts and minds. We have to drain the dark well from which extremism breeds.
“If we don’t then the appalling scenes we have seen on our television screens this black weekend will be repeated time and time again over the next generation.
“And many more families will wonder why their loved ones went off on something as innocent as a fun-filled holiday never to return.”