Dolan, formerly the head of the academy, was placed in temporary charge following the sacking of Brian McDermott on Monday, while assistant manager Nigel Gibbs also left the club.
Reading's 2-1 defeat by Aston Villa last Saturday was their fourth in a row in the Premier League and left them 19th in the table, with only goal difference keeping them above QPR.
Former Swindon boss Paolo Di Canio remains the favourite to take over at the Madejski Stadium with most bookmakers ahead of Roberto Di Matteo and Nigel Adkins, another man considered very unlucky to lose his job after securing promotion to the top flight with Southampton last season.
With only nine games left to save themselves, time is of the essence for Reading, but they are without a game for a fortnight after Saturday's clash with Manchester United because of international fixtures.
It would be a surprise if owner Anton Zingarevich did not have a new man in place by the time Reading meet Arsenal on March 30 and the Russian has been at the club's Hogwood Park training ground today working with director of football Nick Hammond on the recruitment process.
Reading's players have been queuing up to praise McDermott, who had been part of the staff at Reading since 2000. Captain Jobi McAnuff wrote a tribute to the former manager on the club website today and revealed he spoke to McDermott on the phone after his sacking on Monday.
The winger said: "Obviously it was a difficult conversation but he handled himself with great dignity. He wished us all the best for the season, which is a mark of the man. He didn't talk about himself or what had happened, he just had the players' and the club's best interests at heart."
Zingarevich addressed the squad on Tuesday and McAnuff stressed the players "fully respect his decision".
McAnuff continued: "Eamonn and I also spoke at length and I would like to wish him the best of luck and emphasise that he has the full support of the players as we concentrate on Saturday's game."
- Sports & Recreation
- Brian McDermott
- Paolo Di Canio