Lydiate hasn't played since breaking his ankle on regional duty against Edinburgh six months ago but his club coach hopes to select his star six when the Dragons face the Scarlets at the Millennium Stadium on March 30.
"He's going through return to play protocols and is very close," said Dragons boss Darren Edwards, who had initially hoped to have Lydiate available earlier on this month.
"He's had a few niggles, not just the ankle. He can only play when he's 100 per cent.
"Unfortunately, he strained a hamstring a couple of weeks back which has delayed his return.
"I'm almost certain he will be back for the Scarlets game. He's been training with us and there's enough experience in him to get him back out there.
"He should be a definite for the week after next."
The 25-year-old's imminent return is good news for Lions chief Warren Gatland, who will name his squad to tour Hong Kong and Australia at the end of April.
Lydiate was being talked about as a certain tourist prior to his injury setback after he was named Player of the Championship in last year's RBS 6 Nations.
He hasn't played international rugby since Wales' summer tour series Down Under, however, having missed all four autumn Tests and the recent Championship campaign that culminated in Saturday's stunning win over England.
If he does return against the Scarlets in the regional double header in Cardiff, Lydiate will have three games to prove his form and fitness ahead of Gatland's selection announcement.
After the derby-day fixture on March 30, the Dragons travel to Ulster on April 12 and then host Munster on April 19, with Gatland set to name his squad on April 30.