Jeremy Corbyn’s leadership campaign has demanded an apology from Owen Smith after the challenger apparently described his rival as a “lunatic”.

Corbyn’s team reacted with anger over claims that Smith, a shadow Cabinet minister until just weeks ago, used the term about his former boss at a rally in London last night.

The Labour leader, who has himself faced an onslaught of criticism overnight because of his controversial video on a “ram-packed” Virgin Train service, said Smith’s language had descended into “personal abuse”. This morning Smith issued a partial apology.

The latest twist in the increasingly bitter leadership race came when Smith used an event in Hammersmith to answer questions about Corbyn’s strategy for winning Labour votes from supporters of other parties.

“At a hustings a few weeks ago, Jeremy Corbyn said, ‘Yes we’ve got to get some of the people who contemplated voting Tory in the past to vote Labour.’ Rubbish! We’ve got to get two million people who actually voted Tory, 12 months ago, to vote Labour, in 106 seats,” The Independent reported.

“And what you won’t get from me, is some, you know, lunatic at the top of the Labour Party, you’ll have someone who tries to form a coherent narrative about what’s wrong with Britain,” it is claimed Smith said.

A spokesperson for the Jeremy for Labour campaign, today said: “Owen Smith has degraded this contest by descending into personal abuse. He should apologise to people suffering with mental illness, many of whom would have been dismayed and upset to to hear such offensive language used in public by a Labour politician.

“He should also withdraw his remark, and spend time with people suffering from mental health problems to develop some sensitivity in his use of language. This is simply not the language that someone standing to lead our party should use, and it injects an ugly tone into this contest that no Labour member wants to see.”

Smith’s intervention also prompted dismay from the Labour Campaign for Mental Health. In a statement posted on Facebook today the group said: “While we tend not to comment on the leadership contest, we were saddened to see that the term ‘lunatic’, a term with a long history of abuse toward those with mental illness, has been used in this contest as a term of derision against a colleague. We, as a party, should be fighting to end the stigma and support those in our community with mental health issues, and not use these cruel, oppressive names to insult opponents.”

Today Smith denied his words had been aimed at Corbyn, who has fought for better treatment of people with mental health problems.

When asked about the comments on the BBC, Smith said: “I didn’t say that… I was saying that I wasn’t a lunatic. Having been accused earlier in the evening of running around like a lunatic I was saying I wasn’t a lunatic – but if anybody is offended by the use of that word then I do apologise, I have done that already this morning and I will do it again, but I wasn’t talking about Jeremy, I was talking about me…

“It is an unreserved apology to anyone who was offended by the use of the word lunatic because I wasn’t calling Jeremy a lunatic.”

Smith was also forced to defend his own approach amid suggestions he was “loose” with his language following his earlier claim he wanted to “smash” Theresa May “back on her heels”.

“You have got to learn, I think, in this job that you need to weigh every word very, very carefully as they are all weighed for me – and I have not done that judiciously enough on occasion,” Smith said.

“It suggests I am occasionally a bit colourful with my language. I need to be a slightly less colourful perhaps in future.”