The deal was struck under Google's own model, News Showcase. Google has reached pay deals with more than 450 publications globally since News Showcase was launched in October.
Google announced two weeks ago that it had begun paying seven far smaller Australian websites under News Showcase.
Google regional director Mel Silva said: "We are proud to support original, trusted, and quality journalism and are excited to welcome Seven West Media today as a major Australian publishing partner to join Google News Showcase."
The partnership was a substantial investment for Google in journalism not just in metro areas but in smaller communities, she added.
Neither Google nor Seven West Media mentioned how much the deal was worth. Rival media company Nine Entertainment reported, citing unnamed industry sources, that it was worth more than A$30 million a year.
Seven West Media said it will release more details about the deal after those details are finalised within 30 days.
Before the announcement, Treasurer Josh Frydenberg had said Google and Facebook were close to striking commercial deals, "which could be of real benefit to the domestic media landscape and see journalists rewarded financially for generating original content, as it should be."
Google and Facebook did not immediately respond to requests for comment about Frydenberg's discussions with their leaders.
Google has ramped up its campaign against the proposed law, telling the Senate committee that scrutinised it that the platform would likely make its search engine unavailable in Australia if the code were introduced.
Facebook has threatened to block Australians from sharing news if the platform were forced to pay for news.
While the digital giants can afford the likely cost of paying for the Australian news they link to, they are concerned about the international precedent that Australia could set.
Google has faced pressure from authorities elsewhere to pay for news. Last month, it signed a deal with a group of French publishers, paving the way for the company to make digital copyright payments. Under the agreement, Google will negotiate individual licensing deals with newspapers, with payments based on factors such as the amount published daily and monthly internet site traffic.
In Australia, the platforms can make payment deals with media businesses before the code is legislated.
The legislation would create an arbitration panel to make binding decisions on payment in cases where a platform and a news business can't agree on a price for news.
The panel would usually accept either the platform's or the publisher's best offer, and only rarely set a price in between.
This should discourage both the platforms and news businesses from making unrealistic demands.
