The website, founded in 2009, attracts around 20,000 unique monthly visitors and has received a grant to cover start up costs for the fortnightly, full-colour newspaper which will be available for free from shops and newsagents.
"We've got funding together for four editions," said founding editor Richard Gurner, speaking to Journalism.co.uk, "the plan is to use those four editions as a platform to get revenue for a fifth, sixth, seventh, eighth and so on."
Caerphilly Observer covers the Caerphilly county borough and Gurner said its commitment to connecting with local community groups had led many residents to believe it was already a newspaper.
Gurner said that the success of the website had been noticed by bigger regional news organisations, but that he felt there remains a gap in the market and demand for more "grass roots level local news".
"It's those sorts of stories that do generate quite a lot of interest because it's the type of stories that I believe people want to see, and I believe that there's a market out there."
Depending on the success of the fortnightly edition, Gurner hopes the publication will be able to adapt to bring out a weekly newspaper if sustainable.
Funding for the first four editions has come from the local council's rural development fund, itself supported by the European Union and Welsh government.
Free daily newsletter
- App for journalists: ProCamera, for taking and editing photographs
- Tip: How to engage with your podcast audience on social media
- Birmingham hyperlocals collaborate to cover election hustings
- Tip: Learn how to bring diverse voices into your reporting
- How news outlets can improve their coverage of the LGBT community