We have a rather shy rescue (16-month-old female), too. I've heard that any form of obedience training or agility can help a lot with shy, underconfident dogs. I've also heard trainers recommend nose work classes for shy dogs.
Right now, I'm reading Leslie McDevitt's book Control Unleashed, which contains some really, really excellent advice about how to build confidence and focus in a reactive or distracted dog. I recommend it to you!
Best of luck to you and your pup! I look forward to hearing more about his progress.
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Pyrrha & Eden