Well, it may not really just be a phase now. I would think it's possible that you can improve matters with training and socialisation, but he may not ever really be a confident and outgoing dog.
Thing is, at around the 6-12 month mark, all pups go through a stage known as the second fear imprint - or fear of new situations period. During that time, the dog is likely to become wary or even outright fearful of new situations, people, objects, etc. If you think about it from an evolutionary context, this is about the age where he'd be introduced by his pack to things like hunting and other "responsible" duties or activities. And for that, he needs to know what to be afraid of! And of course, those evolutionary processes and changes don't disappear just because we're keeping dogs now as pets.
Anyway, the way to manage that phase is by showing the dog - through your own confident and nonchalent attitude toward things - that there is no need for him to be frightened of it. A common mistake we people make is to pay attention to the cowering dog - either by trying to reassure him, or worse, by encouraging or forcing him to face the scary thing. Well, that of course makes matters worse - it confirms to the dog that there is something to be afraid of. There must be, if the human is making a fuss too. And so - if that's the response he gets, he will be forever fearful (which sometimes takes the form of fear aggression, btw). The dog who's shown by his leader that there's nothing whatever to fear - because the human is outgoing and friendly and not the least bit concerned by the new person/thing/situation and allowed to come out his shell in his own time - will learn that there was no need to be afraid. And once the fear imprint period is over, a confident and outgoing dog should result.
Your guy, of course, should be over the fear imprint stage. But it sounds as though he may have missed learning not to fear. Taking a lead now and showing him via your own confident attitude and NO attention to his fear can still help a lot though. You might also consider consulting a behaviourist (not a trainer) for some help in adjusting his outlook. Someone appropriately qualified in behavioural management can really make a difference - not least because they can work with you to achieve a result.
There is a sticky thread at the top of this forum entitled "Aggression Issues". I know it's not aggression you're asking about - but the point is that the thread contains some excellent links. Amongst those (first post) are a couple of links that can help you to locate and contact a behaviourist.
