So you are being paid as 1099 by the agency (A) that has farmed you to another company (C)? And C wants to hire you? Or A wants to hire you?
Assuming A wants to hire you as a W2 employee, seems like a simple math problem. If there are additional benefits to being an employee that you weren't getting, and they are now paying for, you'd reduce your rate by a commensurate amount. They are also now paying employment taxes (FICA). They will withold other taxes that you'd more or less be paying anyway as 1099, like state and federal income tax. The rate they pay you may also be discounted some to account for the overhead they incur paying you as an employee, such as workers compensation, or for equipment and office space that you may use now.
You may have some leverage as they seem to like you enough, so it may be prudent to try and get a small raise. Or view it as a stepping stone to a continuing career path. Work like you have the job above you, even though you aren't getting paid for it...yet.