In a live debate with party leader Jeremy Corbyn, Smith said the group should eventually be part of any solution to civil war in Syria.
He was condemned by Conservative former army officer and Commons defence committee member Johnny Mercer, as well as Corbyn’s camp, who said the comments were “hasty and ill-considered”.
“Ultimately all solutions to these sorts of international crises do come about through dialogue so eventually, if we are to try and solve this, all of the actors do need to be involved,” Smith said in yesterday’s BBC debate. Asked the same question, Corbyn replied: “They are not going to be round the table. No.”
A spokesman for Smith later clarified that no negotiation should take place with IS unless they “renounce violence, cease all acts of terror and commit themselves to a peaceful settlement”.
Mr Mercer said: “Owen Smith’s suggestion that we should get Isis ‘round the table’ demonstrates his unfitness for leadership.
“His desperate attempts to out-Corbyn Jeremy Corbyn have led him to the view that barbaric murderers who behead journalists and lynch homosexuals are now the sort of people that we should negotiate with.”
Smith told an audience of Labour supporters that he would return to the back benches if he failed in his leadership bid, but would welcome Corbyn into his cabinet.
The Labour leader faced questions over claims he has failed to clamp down on anti-Semitism and abuse of female MPs. Corbyn insisted he had dealt with complaints “very strongly and very robustly”.
“I have made absolutely clear that any kind of abuse is totally unacceptable in any form,” he said. Smith claimed that “lots of my female MP colleagues feel Jeremy wasn’t supportive enough. Lots of my Jewish MP colleagues feel Jeremy wasn’t quick enough to condemn anti-Semitic abuse”.
In more light-hearted questioning, Corbyn was unable to identify TV presenters Ant & Dec, while Smith struggled with footballing knowledge.
The pair will travel to Scotland next week to face questions from Labour members at a hustings in Glasgow.