The Scotland international's current deal was due to come to an end next month, and West Brom had been ready to let him go.
Dorrans had been over-looked for much of the season but was brought in from the cold by Pepe Mel for the final nine games of the season - and played a starring role in their survival battle.
Despite Mel's exit, the Baggies are now looking at keeping Dorrans and they have taken up the year's option.
With the option in place and Dorrans unable to leave on a Bosman free transfer, they have also opened talks over a new deal with the hope of agreeing an extended stay with the 27-year-old.
Dorrans joined West Brom in 2008 from Livingston and has gone on to play over 150 games.
Meanwhile, one player who is out-of-contract and looks unlikely to stay at The Hawthorns is full-back Billy Jones with reports in the Midlands suggesting he is ready to leave on a free transfer.