The Pan-Arabia Enquirer ran the fake story in which it claimed the group, which has claimed territory in Syria and Iraq through violence and intimidation, had hired the agency in a deal worth as much as $10m.
Islamic State is estimated to have killed hundreds of members of an Iraqi ethnic group, the Yazidis, on the basis of their religion and carried out the beheading of American journalist James Foley last week.
The story quoted a made-up spokesman for the agency claiming it "would be able to use our expertise to help steer this engaging and fast-moving brand on to the next stage of its exciting journey".
However, after pulling the story shortly afterwards following a complaint from Bell Pottinger, it posted an ‘apology’, which has now also been removed, on Facebook.
A Bell Pottinger spokesman confirmed that it requested the initial story be removed but said it had not complained about the subsequent apology, which The Pan-Arabia Enquirer confirmed it had removed of "its own volition".
Bell Pottinger has worked with The Pinochet Foundation, the Bahrain Economic Development Board and the lawyers of Rolf Harris during his recent trial for a string of sex attacks on young girls.
This story was amended on 28 August to remove an incorrect description of the Yazidis as Christian.