The most common form of therapy for the treatment of specific phobias is a form of cognitive behavioral therapy (CBT) known as systematic desensitization or exposure therapy.
In this form of therapy, people are exposed to the object or situation they fear in a safe and controlled way. The most common form of this therapy is gradually exposing people to the fear producing object, first in their imagination then in reality. With each exposure, the fear is presented long enough with support, so that the patient can increasingly become aware of the control they have in the situation. Eventually, this will happen enough times that the anxiety and panic begin to diminish and the patient will realize that while the situation may be unpleasant, it is not harmful. Throughout therapy, the patient will continue to gain control over their phobia. These exposures are also combined with relaxation techniques and a therapist, family member, or friend will stay with you during therapy for support.
Another form of exposure therapy is called participant modeling. In this therapy, the therapist models healthy ways of experiencing and reacting to the object of the fear. The patient watches the therapist handle the phobia in a relaxed state and without fear. This modeling is supposed to help the patient do the same.
A note on medications: medication is rarely used to treat a specific phobia. However, it may be used to reduce the anxiety of a patient that is too anxious to participate in exposure therapy. Social Phobia, though, is usually treated with medication.
Other Effective Forms of Treatment
Hypnotherapy
uses systematic desensitization and other therapeutic methods under hypnosis by a clinical therapist.
Group Exposure Therapy uses the same exposure and modeling techniques as in individual therapy, except people undergo the treatment with a group of three to eight people.
Virtual Reality Exposure Therapy uses 3-D computer graphics to simulate the objects/environments that the people fear.
Source: Helpguide.org and the National Institute of Mental Health