A part of the agreement, Sky One, Sky Two, Sky Three, Sky Arts, Sky Travel, Sky News and Sky Sports News join Tiscali's channel line-up later this summer. This will give Tiscali customers access to US imports such as '24', 'The Simpsons' and 'Lost'.
Tiscali already carries premium channels Sky Movies and Sky Sports on its TV platform.
Sky said the deal was an endorsement of its "decision to increase investment in our basic channels by almost 70% in the last five years".
Sky was tipped to make a bid for Tiscali last month in a move which would give Tiscali's customers access to channels including Sky One and Sky News.
The tie-up will put further pressure on cable rival Virgin Media, still locked in a battle with Sky over carriage fees. The News Corp owned broadcaster pulled its basic channels package, including Sky One, Sky Sports News and Sky News, from the Virgin Media platform at the end of February after the two failed to agree terms of renewal.
Tiscali operates an IPTV television service, Tiscali TV, previously known as Homechoice.
Tiscali acquired the business in 2006 via a merger with Homechoice's parent company Video Networks.
Tiscali TV is a triple-play service offering telephone, IPTV and internet access packages.
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