Both players have impressed since their return for pre-season training both in terms of their fitness and attitude.
Davies, who initially signed a six-month deal, has now agreed to remain with Blues until at least the Summer of 2018 having made a big impact on the left side of midfield.
Dawson has had to bide his time for the offer of a contract and has impressed everybody at the club with his willingness to show complete commitment ever since his arrival last season.