The Prime Minister told MPs he believes there is a "very strong case" for labelling the terror group's actions as acts of genocide, adding that he hopes they will be "portrayed and spoken as such".
It comes weeks after MPs approved a non-binding motion which pressed for the matter to be referred to the UN Security Council by 278 votes to zero.
But Foreign Office Minister Tobias Ellwood initially replied by insisting it is up to the courts and not the Government to make the judgment.
Speaking during Prime Minister's Questions, Conservative former minister Sir Edward Leigh (Gainsborough) told Mr Cameron: "The Christian, Yazidi and Shia children in Syria are suffering from genocide by Daesh and we should recognise it as such.
"May I urge you to indeed do more to replicate the Kindertransport of the 1930s.
"That is what we're doing in taking children directly from the camps in Syria. If we were to take 16-year-olds from a safe environment in Europe we would simply be causing more misery and encouraging the people traffickers."
Mr Cameron replied: "Well you basically asked me two questions there. One is whether there's more we can do to label what has happened as genocide.
"This has always been something that is done under a legal definition but I believe very much that ... there's a very strong case for saying it is genocide and I hope it will be portrayed and spoken as such.
"On the issue of the Kindertransport, I would agree with you.
"We've got an enormous amount that we can be proud of - the money we've put into the camps, the fact we've raised more in London on one day than any humanitarian conference has ever raised in the history of the world, and we've got a very strong record.
"Now, as I'm saying we are going to do more for children who are already registered in Europe before the EU-Turkey deal, but the principle we should try to cling to is that we shouldn't do anything that encourages people to make the perilous journey.
"That's been the cornerstone of our policy and it should remain the case."