Jenny Tonge MP told a British satellite channel on Thursday that she understood the attackers' "desperation".
She told Sky News: "I do not condone suicide bombers. But I do understand why people out there become suicide bombers - it is out of desperation. If I was in their situation... I might just think about it myself."
Tonge, a former International Development spokeswoman with the Liberal Democrats, later said she wanted to highlight the Palestinians' cause.
"They are in a terrible plight and the world is standing by and watching," she told BBC News. "Something needs to be done."
"I do not condone suicide bombers. But I do understand why people out there become suicide bombers - it is out of desperation. If I was in their situation... I might just think about it myself"
Jenny Tonge MP
However, her comments were condemned by politicians and families of bombing victims.
"She has encouraged and condoned the most atrocious acts of violence," Lord Janner, vice-chairman of the British Israel Parliamentary Group, said.
Opposition Conservative Foreign Secretary Michael Ancram said Tonge's words would "sicken those who have lost loved ones to suicide bombers".
And the brother of Briton Yoni Jesner, 19, killed in a Tel Aviv bombing, said she was "almost justifying murder".
He told the Sun newspaper that Tonge had shown a "complete lack of understanding" about the Middle East.
More than 450 Israelis have been killed in human bombings by Palestinian resistance fighters during their three-year uprising against Israeli occupation.
"She (Tonge) has encouraged and condoned the most atrocious acts of violence"
British Israel Parliamentary Group
While the Israelis and western governments routinely condemn the bombings as examples of "terrorism", many Palestinians say they are the last resort of a desperate people with no other means to defend themselves.
Last year, the Prime Minister's wife Cherie Blair was forced to apologise to the Jewish community when she said Palestinians felt they had "no hope" but to blow themselves up.
Her comments came hours after 19 Israelis died and more than 40 were injured in a bomb attack on a bus in Jerusalem.