Golwg will use the money to invest in its existing publications
Welsh language publishers Golwg have secured £600,000 from the assembly government which had been earmarked for developing the Welsh language press.
Plans for Y Byd, a Welsh daily newspaper, were abandoned in February amid claims the assembly government had not provided enough financial support.
Golwg was one of several media companies bidding for funding.
It has published its weekly Welsh language magazine for 20 years and said it would now develop an online service.
Dylan Iorwerth, editor and director of the Ceredigion-based magazine, said: "We're extremely thrilled but at the same time, we're very cautious of the massive challenge that lies ahead of us and that this will be a huge responsibility for us."
He said they were planning to develop the online service simultaneously with the existing magazine to "benefit organisations, companies and individuals".
Heritage minister Rhodri Glyn Thomas said it was "good news" for Welsh language journalism and "an investment in the future."
He added: "I understand that each one of the bids was of a high standard and I would like to thank everyone who gave of their time and energy".
Mr Thomas said the report into Welsh language publications referred to how fragile the industry was.
"This development strengthens the industry as well as taking Welsh to multiple platforms and creating pluralism in the Welsh language news sector."
In February, Mr Thomas announced there would be an extra £600,000 over three years to support an assembly government promise to expand the Welsh language printed press.
But backers of Y Byd, which was meant to the first Welsh language daily newspaper, claimed the money was insufficient and sounded the death knell for their proposal.
The newspaper, which was based in Mychynlleth, was first unveiled last June when the company said it would print the first copy on St Davids Day this year.
Five thousand subscribers were being sought for the publication, which was to cover Welsh, UK and international news.
However, in November the company announced that it was reviewing the timetable for the launch prompted by a a report on the Welsh language press which concluded not enough people would buy Y Byd to make it viable.