Dawson had been linked with both Villa and Wolves but eventually found himself in a position where, despite family problems, he was forced to stay at the London Stadium.
Our understanding is that he had hoped to return to the north, or nearer it, as a result of the personal situation and that Wolves had agreed a deal of £5.25 million for him with the Hammers.
However, when Bednarek decided that he was ready to agree a deal with Villa there was no way the Hammers could allow a Dawson move to happen.
David Moyse had seen the Southampton centre-back as the perfect replacement for 32-year-old Dawson but there will be any less commitment from the central defender who has become one of the most wholehearted players at the club and was a defensive rock last season.