1718, "committee of cardinals in charge of Catholic missionary work," short for Congregatio de Propaganda Fide "congregation for propagating the faith," a committee of cardinals established 1622 by Gregory XV to supervise foreign missions. The word is properly the ablative fem. gerundive of Latin propagare (see propagation). Hence, "any movement to propagate some practice or ideology" (1790). Modern political sense dates from World War I, not originally pejorative. Meaning "material or information propagated to advance a cause, etc." is from 1929.
Official government communications to the public that are designed to influence opinion. The information may be true or false, but it is always carefully selected for its political effect.