Crimson, for what it's worth I've had a lifetime of shyness and deficit of confidence. But I do have my good moments. And many of those good moments was when I was just clowning around and didn't care what people thought. Within the guidelines of good taste, of course. And that's a lot of what being confident is all about.
The other angle on being confident is knowing full well what the likely outcome of an arbitrary scenario is. Which is where having a sharp wit comes in handy. For example, you might be having a dialogue, and someone says something which could be taken another way (eg, sexual double entendre) so you say something to underscore that fact, without actually coming right out and saying something which might be inappropriate to the situation.
Quick example:
One person says something like "Wow, that's long." And you quickly add "That's what she said." and grin. Maybe wink. Or go with an exaggerated innocent look, maybe add something like "What? I'm just sayin'," and leave it at that. This will go better either with people you're comfy around, or with total strangers in a relaxed setting. If there are people in your crowd who would deliberately antagonize you, then best to just keep quiet.
Something I discovered which really helped me was IRC. Or chat rooms, if you prefer the more generic version. I eventually realized I could easily be more myself, more naturally funny, polished up my timing, schmooze, make deadpan comments, don't play the suck-up, add in a modicum of self-deprecating humour, etc. My epiphany was that I could easily play the game, so long as I didn't have to deal with a woman's gaze. Whether that gaze would see right through me for the shy guy that I am or whatever, the point is that a woman's look can derail me. Until I get to know her, of course.
Another thing to consider is to keep stretching your comfort zone. If you don't, you'll be stuck where you are forever. And sure, you might luck out meeting someone appropriate. But you'll improve the odds if you can keep stretching your comfort zone.
Something to consider is to take up an activity (karate, chess, basket-weaving, whatever) or a course (Italian, baking, whatever) which throws you into the midst of like-minded people. Language courses or cooking courses are a good bet, because more women tend to take those courses than, say, motorcycle maintenance. Then you'll be able to focus on the task at hand, but there's a pretty good bet that you'll find yourself thrown into interactions with other students. You can commiserate over things you don't understand, or if you've managed to grasp something that she hasn't, you can show her, then try to teach her. Be careful not to come off as a know-it-all, because that could kill it right there. You can hint at knowing something she doesn't know, but act like you don't know something and make a joke about how bewildering it gets. Again, the success of delivering a bit of humour isn't just about the content as much as it is about the timing.
Practice, practice, practice. If you're just at the coffee shop for 10 mins and see a barista (if she's not too busy) or another patron (if she's not too distracted), see if you can't find something light or amusing to talk about. Nothing too deep or lengthy. Don't get into politics or religion, as those are potential minefields.
Have fun.
