The agency won the work without a pitch and will support City AM's PR and communications strategy, as well as providing media relations services.
The paper, edited by Allister Heath, focuses on financial and business news and targets commuters travelling into the City of London and Canary Wharf districts.
Launched in 2005, it is now distributed at 2,400 points in and around London, with a total circulation of 102,813 (ABC, March 2010).
Martin Loat, director at Propeller Group, said: 'Propeller is looking forward to working with such a dynamic newspaper as City AM, to achieve its objectives for future business growth.'