Your dog may be timid because he is predisposed to have a timid personality, or he may be reacting to something that happened earlier in his life that has left him frightened. Patience and understanding are the best treatments for timidity.
Determine common things that trigger your pet. Is he afraid of everything? Loud noises? New people? Knowing what sets your pet off allows you to preemptively calm him.
Distract your dog while you are exposing him to things that frighten him. For example, keep treats in your pocket. When you are walking him and see a stranger approaching, start talking to your dog, slip him a treat or two, and continue on your way. The goal is to keep his focus on you as he passes the stranger.
Take your time when working with your pet. He may not show improvement for weeks or even longer, and he may never become exceptionally bold. Just continue to work with him.
Allow an escape route. Making a timid dog feel trapped will increase anxiety. This means not allowing strangers to approach your pet while he's against a wall, forcing him to remain outside during a thunderstorm, or allowing any other behavior that makes him feel exposed to his fear.
Set a routine. A regular schedule makes it much easier for a timid dog, because he will know what to expect. Walk and feed him at the same time each day, and use familiar paths when walking.