The Sinn Fein vice-president made the comments during an interview for the BBC podcast series ‘Red Lines’.
Some unionists accused Ms O’Neill of attempting to “justify the unjustifiable”.
Yesterday, the Innocent Victims United (IVU) umbrella group and a number of individuals bereaved due to IRA murders joined those expressing disgust at the Sinn Fein leader’s assertion.
During the podcast, the interviewer Mark Carruthers stressed that Ms O’Neill has been outspoken in her opposition to violence, but posed the question: “Do you still feel that it was right at that time, for members of your family and others, to engage in violent resistance to British rule here?”
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She replied: “I think at the time there was no alternative, but now thankfully we have an alternative to conflict, and that is the Good Friday Agreement”.
IVU spokesman Kenny Donaldson said: “Yes there was an alternative, the ballot box was always there to be in both hands, it was a choice to brandish the Armalite or Semtex in one or both hands.
“Whatever grievance, perceived or real, people experienced within this society it never legitimised the murder of one neighbour by another.”
The interview with Ms O’Neill covered a number of aspects of her early life, including being “prayed over” at her Catholic grammar school when she became pregnant at 16. However, it was her comments about the IRA that sparked the backlash.
Mr Donaldson added: “They cry out for a United Ireland of land, that this will be the Utopia that justifies all the death and killing, but the penny still hasn’t dropped that this cannot and would not ever happen or be remotely possible without first the people being unified.”
Ann Travers, whose sister Mary was murdered by the IRA in 1984, tweeted: “There were many of us during the Troubles knew there was an alternative to murder. Michelle O’Neill’s words were sickening. As for people saying its the past, it is for thousands of us our present.”
On Wednesday, Sir Jeffrey Donaldson said Ms O’Neill cannot claim to be a first minister-in-waiting for everyone in Northern Ireland, while at the same time “apparently standing over sectarian and cold-blooded atrocities like Enniskillen, La Mon and Kingsmills”.
The DUP leader said: “There was never a justification for violence.
“Even in Northern Ireland’s darkest days the overwhelming majority of our people respected democracy, the rule of law and – where they felt passionately about a particular cause – took part in peaceful protest. Sinn Fein can pretend there was no alternative but they are condemned by the facts.”