Google and Facebook would be forced to agree a price with newspapers for using their stories under new laws being drawn up by the government.

If adopted, the tech giants would be told to negotiate payment deals with news organisations in order to display their content. Should talks collapse, arbitrators would set a fair price.

The plans from the Department for Digital, Culture, Media and Sport are understood to be modelled on a law passed by the Australian government in February last year, which drew fierce opposition from the two platforms.

Facebook initially responded to the move by blocking all news content to Australians but reversed the decision after negotiations with the government and tweaks to the law.

Similar action in the UK would serve to counter concerns over tech companies taking the lion’s share of online advertising revenue by ensuring that public interest journalism is funded.

The new regime would be regulated by the Digital Markets Unit, the digital watchdog set up within the Competition and Markets Authority (CMA).

It would be given powers to act “swiftly and effectively” where the regulator found that a platform had not offered “fair and reasonable remuneration for its use of publisher content”, a government source media.

Algorithms used by search engines that filter how people read and access news will also be investigated by the unit amid criticism from publishers that they work to the detriment of quality, paid-for journalism.

Google and Facebook took about 80 per cent of the £14 billion spent on digital advertising in the UK in 2019, according to the CMA. National and local newspapers took less than 4 per cent. Google has a more than 90 per cent share of the search advertising market in the UK. Facebook controls more than half of the display advertising sector.

The CMA has said it wants to “lift the lid on how advertising revenue drives the business model” and ensure that major platforms “do not engage in exploitative or exclusionary practices”.

A source in the department told The Mail on Sunday, which first reported the story, that the planned regime was “pro-competition” and “supports the sustainability of the press” by tackling the “imbalance of power between the largest platforms and publishers”.

Legislation would be introduced “as soon as parliamentary time allows”.

Facebook pays UK news outlets millions of pounds a year to license their articles but is still in the crosshairs of the crackdown over its dominance of online advertising. The social media company also funds 80 trainee reporters in newsrooms across the country as part of the Community News Project.

Most British newspaper groups signed up to the scheme, under which articles appear in a dedicated news section on the site. In return, publishers have been promised substantial cash sums and the promise of new readers.