Ahmed al-Tayeb, the Grand Imam of Al-Azhar made the comments following a meeting with the Archbishop of Canterbury, Most Revd Justin Welby at Lambeth Palace.
Speaking through an interpreter the Grand Imam told reporters that "Arabs as well as the Free World has to work side by side to defeat this [Islamic State] organisation."
Asked by Premier if he believed military intervention or a diplomatic was the best course, he said: "I prefer the diplomatic solution because I represent an organisation which refuses bloodshed, no matter where is this bloodshed and where from."
After clarifying his remarks, saying he preferred political over diplomatic means, the Grand Imam said: "So if political efforts do not combine, we will all pay the price. I hope to see political solutions that will put an end, a stop to what is happening."
Asked by Premier what he meant by "political solutions'' to reach peace in the Middle East, he said: "Being non-political, I would think that there is the United Nations, there is the Islamic World Organisation and there are other bodies that are there in order to bring peace. Also the GCC, the Gulf Cooperation Council.
"If you look at the UN charter, you will see that there is an article, there is an item that talks about imposing peace in the world, if you apply this item then you will be able to hope to see peace."
The US and its allies, including the UK, have conducted thousands of strikes in Iraq, since August, and Syria since September. Isis militants hold large swathes of territory in the two countries and have executed captives and western hostages and destroyed ancient cultural sites and artifacts.
The Grand Imam is on a two-day visit to Britain as a guest of the Archbishop.
The visit builds on an agreement aimed at promoting dialogue between Christians and Muslims which was signed in 2002 after the 9/11 terror attacks.
This is the first time that the two leaders have met as part of this agreement.
The Imam said: "Of course we all agree that Israel is there and there are problems that people suffer.
"We need assistance from world powers so that peace can prevail in the Middle East.
"I do not know who is behind Daesh (Islamic State). I have no idea where they get their support from.
"There is a major terrorist organisation that the whole Arab (world) are paying a price for.
"The Arabs as well as the free world have to work side-by-side to defeat these organisations."
The Archbishop said he agreed with what the Grand Imam said.
He also said a "significant" discussion took place in which both religious leaders "stressed the importance of the continuation of the dialogue in the midst of the very difficult circumstances that the world is facing".
The Archbishop noted: "We have witnessed much violence and terrorism in the name of religion."
Both men said they wanted to "build bridges of peace" among communities of both faiths.
Representatives of the Anglican churches worldwide and the Grand Imam are to hold further talks at a special session in Cairo in December.
