Dalman and chief executive Ken Choo have held “positive” talks over a transfer budget with Warnock, 70.
Owner Vincent Tan had said he wanted Warnock to remain and seek a record ninth promotion.
“He is the best man for the job, there was never any doubt in my mind,” said Dalman.
Warnock has a year left on his deal but there was speculation he might leave following relegation after one season in the Premier League.
He had sought assurances over a budget to buy the “two or three” players he believes is required for a tilt at another promotion.
Dalman added: “We all share the same vision. We will give it [promotion] another go.”
Warnock is now expected to move quickly to enhance his squad following the departure of Iceland midfielder Aron Gunnarsson and loan players Harry Arter and Victor Camarasa.
The manager is credited with transforming the club’s fortunes following his arrival in October 2016.
However, he is unlikely to stay if he does gain an unprecedented ninth promotion.