Communications Minister Paul Fletcher announced the grant on Friday, lauding the news wire’s commitment to accurate, fact-based and independent journalism.

“The AAP Newswire provides services to more than 250 regional news mastheads across Australia, covering public interest content on national, state and regional news,” he said.

“This allows regional mastheads to concentrate on local news stories important for their communities.

“Importantly, AAP also provides regional stories for national distribution so that regional issues and voices are heard across the country.”

The money will be drawn from a public interest news gathering fund.

AAP chair Jonty Low and chief executive Emma Cowdroy welcomed the funding announcement.

“Today’s announcement by the prime minister is a welcome endorsement of the role that AAP plays in providing a key piece of Australia’s democratic infrastructure,” they said in a joint statement.

“AAP provides content to hundreds of newspapers and radio stations, most of which are in regional areas, who couldn’t possibly each send journalists to cover what happens in our nation’s capital cities, our courts or our sporting fields.

“In supporting AAP, the prime minister is supporting a key plank that supports Australia’s media diversity.”

Earlier this week, three influential crossbench senators wrote to the prime minister urging him to support AAP.

Tasmanian Jacqui Lambie and South Australians Rex Patrick and Stirling Griff said an urgent intervention was needed to save AAP and the hundreds of regional publishers who rely on its content.

The Greens have previously made a similar request.

“If the work of AAP is as valued as it ought to be, the Morrison government must invest in it,” the trio wrote.

“Should AAP be unable to secure public funding, we fear that it might be lost forever.”

The senators believe the funding should be provided annually for three years to ensure AAP stays afloat beyond the coronavirus economic crisis.

They acknowledged the amount of money was “not insubstantial” but said AAP underpinned the jobs of more than 1000 regional journalists and delivered news to millions of people.

AAP was taken over by a group of philanthropists and impact investors in June after News Corp and Nine announced plans to shut it down.

The downsized not-for-profit news wire is also running a crowdfunding campaign to drum up support, raising almost $120,000 of its $500,000 goal so far.