The Reds slumped to yet another loss for the season when they were beaten 2-1 by Blackpool on Wednesday night and although Dalglish felt the players completely committed themselves to the cause, he insisted that there was a distinct lack of confidence among the ranks which needs to be fixed.
"You can see that their effort and commitment, desire and pride is there from all of them," he told Sky Sports.
"Sometimes it doesn't matter how good a player you are, if you don't have the belief in yourself then it's not going to be helpful towards you.
"We've got to work hard and we'll give them a little bit of belief and confidence.
"They have been really encouraging, the way they've gone about their work.
"I think the players here are very good players but they just have to believe in what they're doing and believe in themselves more."