John Flanagan and Jack Robinson have both made their debut in the past week, to feature alongside another local product, midfielder Jay Spearing.
And another young Liverpudlian, Martin Kelly, made great strides under Dalglish before getting injured.
"He gives great confidence to players," Kuyt told BBC Radio Merseyside.
"Especially to the younger players who come in.
"If you can give confidence to younger players as a manager, then that's a great plus.
"John Flanagan had to play on Monday night at right-back against Manchester City.
"And, against Arsenal on Sunday, it was Jack Robinson at left-back after Fabio Aurelio's injury. He came on and he played perfectly."
Liverpool's draw at The Emirates against the Gunners on Sunday just about keeps them in the hunt for a Europa League place.
Dalglish's men are just four points behind fifth-placed Tottenham, who have two games in hand, and seven points behind FA Cup finalists Manchester City.
And that was down to 12-goal Reds top scorer Kuyt (who has now scored four times from the spot this season) once again keeping his nerve.
The 30-year-old Dutchman, signed up on a new two-year deal last seek, admitted after his 112th-minute injury-time equaliser that it is a great feeling to score such an important goal so late in a game.
"Thank God, we didn't lose," he said. "It's great when you're 1-0 down in the last minute of a game and you get a penalty and score it.
"I thought it was a great effort by the team under the circumstances.
"We had a couple of bad injuries and the young lads have done a terrific job."
In their battle for Europe, Liverpool must now sweat on the outcome of Spurs' North London derby clash against Arsenal at White Hart Lane on Wednesday night before hosting Birmingham City at Anfield this Saturday (1500 BST).
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