The committee's task was only to determine whether Smith should be punished. Another committee will choose whether to reprimand, censure or expel Smith -- or to take no action.
"We are united in our decision to recommend charges against Rep. Smith," said Rep. Elaine Nekritz, committee co-chair. "We considered the evidence before us, representatives' statements and those of his attorney."
The seven-page report said the alleged misconduct legislators should examine is that Smith "abused the power of his office by participating in a scheme to obtain a personal benefit in exchange for his official acts."
Smith, 48, allegedly took the bribe for backing a $50,000 state grant application on behalf of a day care center that turned out to be fictitious. Authorities say it was an FBI sting with an undercover informant wearing a recorder.
Smith has pleaded not guilty to accepting a bribe in exchange for using his influence to obtain a state grant. He has mostly avoided public comment on his legal trouble but told reporters in April that he planned to fight the charges.
If convicted, Smith could face a maximum 10-year prison sentence and a $250,000 fine.
Members of the committee said they were prompted to act now as they are unclear how long the legal process will take.
"I think that the entire integrity of the system is compromised if we take no action whatsoever, and it looks as if we're not doing enough to keep our own backyard clean," said Rep. Dennis Reboletti, committee co-chair.
"Rep. Smith is standing strong and is doing a great job on behalf of the people who elected him even after these charges were announced by the government," said Vic Henderson, Smith's attorney.
Henderson said the House committee's decision is premature.
"We're comfortable that when the light is shone on all of the facts people will have a different view of it," he said.
Illinois Secretary of State Jesse White, who led a search for Smith's challenger, issued a statement Wednesday, saying in part: "Today's action by the House of Representatives investigation committee is another reason Mr. Smith should resign from the ballot immediately."
Lance Tyson was picked among the applicants to mount a third party campaign against Smith.
"I've been hitting the streets, talking to folks and getting a sense of what the community expects and they're disappointed," he said. "They feel disappointed and clearly they deserve more."
Appearing before the committee last month, Smith declined to speak, something the committee's report noted. It said he was within his rights but suggested his refusal to talk was "an impediment to (the committee's) fact-finding mission."
During the hearing, Henderson, accused the government of relying on "manufactured documents and other fake information in their zeal to create an alleged crime."
In making its finding, the special committee had a much lower standard of fault-finding than Smith would face in federal court.
Smith's political saga in some ways echoes the corruption case of imprisoned former Gov. Rod Blagojevich. As with that case, Smith's also has proven an embarrassment for Illinois Democrats.
Democratic leaders were shocked when Smith, who was appointed to his House seat to fill a vacancy, was arrested on the federal bribery charge just before Illinois' March primary. Still, Democratic leaders encouraged voters to back Smith because his Democratic primary opponent was a former Republican official.
Once Smith won with an overwhelming majority, Democrats switched course and party leaders from across the state began calling for him to resign.
Smith has given no indication he intends to step down.
"The people in my district elected me ... even after the government charged me with wrongdoing and that's because they believed in me and what I will do to represent them in Springfield," he said in April. "God gives us all a cross to bear and this lawsuit is mine."
The Associated Press contributed to this report