We had similar issues for a long time. Then something clicked. This past year my DD has completely come out of her shell and I now have to watch her to make sure she plays nicely with other kids. (I know, not the most desirable outcome, but I'd rather that than have her come to me crying constantly because someone looked at her funny )
She now says very clearly, "STOP IT" and can defend herself that way. It just happened with practice. Does he attend kindy or playgroups? If he is only just getting confident in playing with other kids then he probably still needs that extra bit of practice, maybe?