"I've always felt very settled here and I'm delighted to have reached this agreement," Dawson said in a statement.
"I've watched the club come through a challenging spell and like to feel I have played my part in helping us improve, step by step."
West Brom host Stoke City in the league on Sunday.
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(Reporting by Hardik Vyas in Bengaluru; Editing by David Holmes)
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