The 22-year-old damaged ankle tendons in the Magners League win over the Ospreys on March 27 and has since had an operation to correct the problem.
"It seemed a pretty innocuous injury at the time, but I suppose it's an occupational hazard," said Dragons rugby manager Robert Beale.
"We have certainly missed him, but it's close to the end of the season so he will have the summer to recover and he's also got time on his side with Wales."
Lydiate will now be unavailable for the games against Edinburgh, Cardiff Blues and the Ospreys as the Dragons continue their push for Magners League Play-Off place.
The injury also rules Lydiate out of Wales' upcoming tour of New Zealand and the June 5 clash with South Africa at the Millennium Stadium.
Prior to his injury setback, Lydiate had been expected to be one of Warren Gatland's back-row selections for the summer Tests as he looked to build on his two international caps to date.
Lydiate was a surprise inclusion in the Welsh squad for the autumn series and went on to make his debut against Argentina before earning his first start in the defeat to Australia.
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