Fears for the future of Australian news agency AAP have been allayed with the government’s budget promise of $15 million in federal funding.

Chief executive Emma Cowdroy has described the pledge as a “welcome endorsement” of the role Australian Associated Press plays as a key piece of democratic infrastructure.

"Most people only know AAP as a small acronym beneath a photo or beside an article, but without the newswire there would be a significant void in Australia's news offering," she said.

Since its near closure by previous shareholders – dominated by News Corp and Nine – AAP has become a philanthropy-funded not-for-profit operation, and competes with News’ NCA Newswire for business.

“In the context of AAP’s exclusion from the Digital Platforms Mandatory Bargaining Code, this grant will help underpin the AAP newswire on its path to sustainability,” Cowdroy said. “The AAP newswire is an essential part of our democratic infrastructure. Supporting the national newswire means supporting the industry as a whole.”

AAP chair Jonty Low added the organisation’s thanks: “On behalf of all of AAP’s staff, the hundreds of news outlets that rely on our stories and images and the millions of people who consume it each week, I would like to warmly thank prime minister Scott Morrison and communications minister Paul Fletcher.” 

The unprecended commitment will doubtless raise further concerns about the government's relationship with the media, but should avert fears the agency would close.