In recent weeks, the 25-year old had been linked with moves away from the Premier League, with Paris Saint Germain mooted as a possible destination following an intense six months on Merseyside, including the case against him for racially abusing Patrice Evra.
Liverpool are 11/1 with Sportingbet to finish in the top four of the Premier League this season.
But after Suarez confirmed that he has no intention of leaving the club, Dalglish believes that is a big positive for his side.
"It's certainly encouraging for us - although it might be bad news for the other Premier League teams," Dalglish told the Mirror.
"Luis has always said he is happy here, so it's great for everyone who supports Liverpool.
"I don't think he has been anything other than a threat to the opposition, so we are delighted with the wee man's comments and we have been delighted with him since he has been here.
"He scores goals, creates goals, and it's great news that he is happy.
"Luis has made a contribution every time he has stepped out on to the football pitch."Suarez netted in Liverpool's FA Cup quarter final victory over Stoke City at the weekend to book a second Wembley date for Dalglish's men after winning the League Cup last month, and the striker is convinced the club are heading in the right direction.
"To get to two finals in one season would be great for the club - a real positive. It would show the team is getting used to the manager's system and style of play, as well as how the new arrivals have settled in," Suarez said.
"To be with a club for just a season-and-a-half and win two medals would be great. It's just a case of trying to keep calm and collected, and waiting for the game to come around."
Despite Liverpool's domestic cup form, they have suffered in the Premier League and currently sit seventh and five points behind Newcastle. However, Dalglish has insisted the side will still fight for a Champions League place.
"The top four is still a target," said Dalglish.
"We've got to aim to win our remaining 10 league games and [then] see where we are. It's important we maintain that approach - as though we can win every one.
"Whatever [club owners] John [Henry] and Tom [Werner] can afford will go on players - they have always done that since they came in and they will continue to do it.
"The only irresponsible act would be if they gave a lot more than what they had - then we might end up in a bit of trouble."