Dawson had been close to a loan exit from the club, with Wigan Athletic favourites for his signature.
"Dawson, for me, is the future at West Brom. He is a very good, strong centre-back and his mentality is very good," Mel told The Mirror.
"He wants to play matches. But now I think it is better here because in London we need Dawson to play. Dawson is in the XI in London - he is ready."
Dawson joined the Baggies in 2010 but has struggled to break into the first team.