The Mirror says Dawson slapped in a transfer request to leave Albion last summer after relegation as Burnley bid.
But he is finally poised to return to the big-time a year later after Albion lost in the Championship play-offs on penalties.
Dawson, 29, is in advanced talks with Watford finalising terms over a cut-price £6million switch.
He has just 12 months left on his contract at The Hawthorns and Albion are now willing to do business.
Dawson joined Albion nine years ago from Rochdale and has scored 12 goals in 153 Premier League games for them.