Google has threatened to close its search engine in Australia if the government proceeds with a plan to force Big Tech groups to pay news providers for their content.

The warning is Google’s strongest yet against the landmark proposal, which would compel the company and fellow US tech group Facebook to pay news organisations and publishers in exchange for circulating stories.

Mel Silva, Google Australia’s managing director, told a Senate hearing in Canberra on Friday that the laws were “unworkable” and “unreasonable”, escalating a months-long stand-off between the technology companies and the government.

“If the code becomes law, Google would have no real choice but to stop providing search in Australia,” Ms Silva said.

Australia’s threat comes as Google, Facebook and other Silicon Valley companies face mounting scrutiny from global regulators over their market dominance.

Canberra has described the legislation as “world-leading” and necessary to create a sustainable media landscape. The proposal involves an arbitration system that would make binding decisions on the fees social media groups must pay media companies.

Google, which also owns popular video site YouTube, has already voiced strong opposition to the proposed legislation. The company is estimated to have more than 19m monthly users in Australia, according to the country’s consumer competition watchdog, meaning the vast majority of its online searches go through Google.

Facebook also opposes the law and reiterated a warning at Friday’s hearing that it would block Australians from sharing news on its platform if the legislation was passed.

Scott Morrison, Australia’s prime minister, issued a rebuke following Google’s comments, telling a press conference on Friday that “we don’t respond to threats”.

Ms Silva said that forcing Google to pay news sites to link to their content would break “a fundamental principle of how the web works . . . setting an untenable precedent for our business, the internet, and the digital economy”.

Exiting the Australian market is “the last thing we want to have happen — especially when there is a way forward to a workable code that allows us to support Australian journalism without breaking search”, she added.

Google launched a mobile feature in October called Google News Showcase in an effort to establish new terms of trade with media groups. Google has previously said the programme, which has nearly 450 partners globally, is “on pause” in Australia. However, Ms Silva said on Friday that the initiative could provide a way for Google to reach commercial agreements with publishers in the country.

A vote on the Australian legislation is expected early this year.