Communications Minister Paul Fletcher announced the grant on Friday, lauding the independent news wire's commitment to accurate, fact-based 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 additional $5 million for AAP increases the government's investment in the fund to $55 million.

It has so far provided 93 grants under the fund, which is ultimately expected to distribute funding to 107 regional broadcasters and publishers.

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."

Tasmanian senator Jacqui Lambie has been publicly and privately urging the Morrison government to support AAP.

She congratulated the minister, described the treasurer as a champ, and thanked Nationals frontbencher Darren Chester for his work behind the scenes.

"Hundreds of people at AAP have jobs because of this. That's huge! Hundreds of regional papers who rely on AAP content to keep their audiences informed - they're staying alive too," she said.

"Full credit and sincere gratitude has to go to the Morrison government for seeing what the right thing to do is for regional news and regional audiences, getting their skates on, and just going and getting it done."

Earlier this week, Senator Lambie and South Australians Rex Patrick and Stirling Griff wrote to the prime minister seeking his support.

The trio said an urgent intervention was needed to save AAP and the hundreds of regional publishers who relied on its content.

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

Labor communications spokeswoman Michelle Rowland said federal funding for AAP was a no-brainer and should have been done months ago.

"Why has it taken over five months for this government to respond when things are down to the wire?" she said.

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.

Australian Associated Press