Social media giant Facebook has blocked Austral from sharing or accessing news on the platform.
As of Thursday the Facebook accounts of Australian publishers ranging from the Australian Broadcasting Corporation (ABC) to the Bureau of Meteorology (BoM) and some local health authorities have been wiped clean, Xinhua news agency reported.
Austral have been blocked from sharing news from local sources or accessing news from around the world on the platform.
In a statement, the social media giant said it made the move "with a heavy heart" in response to the federal government's proposed media bargaining laws, which would force technology companies such as Google and Facebook to pay Australian news outlets for their content.
"The proposed law fundamentally misunderstands the relationship between our platform and publishers who use it to share news content," Will Easton, Facebook's Australia and New Zealand managing director, said.
"It has left us facing a stark choice: attempt to comply with a law that ignores the realities of this relationship, or stop allowing news content on our services in Australia."
Paul Fletcher, the Minister for Communications, said that the decision should raise questions about whether Austral could trust what they see on Facebook and vowed to move ahead with legislating the media bargaining code.
"Facebook needs to think very carefully about what this means for its reputation and standing," he said.
"At a time when there are already questions about the credibility of information on Facebook, that is something that they will obviously need to think about."
Earlier Treasurer Josh Frydenberg said he had spoken to Mark Zuckerberg, the founder and chief executive of Facebook, about the decision.
"This morning, I had a constructive discussion with Mark Zuckerberg from Facebook," he said on Twitter.
"He raised a few remaining issues with the Government's news media bargaining code and we agreed to continue our conversation to try to find a pathway forward."
( With inputs from IANS )
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