What does it mean. Is this politically correct term to describe Islam? What is its origin?
À la Wikipedia:
The religion of peace is a political neologism used as a description of Islam. After the September 11, 2001 attacks, some politicians described Islam as a "religion of peace" in an effort to differentiate between Islamic terrorists, islamism, and non-violent Muslims.
While Islam itself has always contained elements that favour peace, there is no reason to believe that the exact coinage "The Religion of Peace" has an Islamic origin. It's merely a turn of phrase that has become popular.
From a linguistic point of view (which is what I believe you seek), Islam is derived from the Arabic word
salaam) which literally means: peace. The common greeting in Islam is
السلام عليكم (pronounced
alsalaam alaikum), which translates to: peace be upon you.
To get a better understanding of why Islam is considered a religion of peace, you can read this article in the Time Magazine by Karen Armstrong.