The Kirkby-based academy has provided a number of players who have been key members of the senior squad this season including Jay Spearing, Jon Flanagan and Martin Kelly.
And Dalglish, who was in charge of the club’s academy prior to his return to first-team management, believes this keeps more experienced squad members on their toes.
He told reporters: "We are delighted with Jay and all the kids who have come through. Everyone who has developed has done us proud, we played at Blackburn [last game] with six boys aged 22 or less.
“Admittedly Jonjo and Seb [Coates] were bought in but we have got a few young people in and around the first-team squad.
"It helps them but also helps the older ones in the squad, it keeps them and young and fresh and we are delighted with everyone's progress."
The Scot went on to credit former Liverpool manager Rafael Benitez for revolutionising the academy setup during his tenure on Merseyside.
"I think it's been fantastic and it's a great credit to the changes that Rafa made three years ago, the way it has moved forward is a credit to anyone who has helped.” Dalglish continued.
"It was Rafa who brought these people in and we should always be grateful to him for doing that. In years to come, if we get some players through it, I'm sure he'll be just as proud as any of the players are - and he should be proud about what he's set up here.”