I do a lot of abdominal work at home - crunches, straight leg raises when lying down - oblique twists and a few others I don't know the names of. Abs are critical in developing balance. To actually test your balance (and improve it in the mean time), a good exercise is to extend your leg behind you, extend your arms forward (like a superman pose) then gently lower yourself into a 'T' position, that is your torso, arms and leg are parallel to the ground, whilst you are supported by your other leg. this is quite difficult to do and requires a lot of core strength, but keep practicing, lowering into the 'T' position gradually and you will see a great improvement in your balance. One legged postures also help. There are also some yoga postures (don't know their names sorry), there is one - standing like a tree or something - that is a killer. Try also lifting your arms in front of you and whilst doing this, rise onto the balls of your feet. See how high you can take your arms before it gets hard. I've been doing these for a while and my posture has improved immensely.
A good tip is whenever you are waiting challenge your own balance. This could be waiting for the bus or train. Stand on one foot or even on your toes on one foot and switch before the leg fatigues too much.
strengthen the legs. Stronger legs = easier to support your weight = better balance. simple, but often ignored.
Check out what Kickchick said, some excellent links there that I think I will use. Core strength is so important for balance. Find a book on abs, back and general midsection, check out reviews before you buy and you will find it will improve your balance. One thing I do is called the plank, for abs and obliques. Balancing on forearms, get in the press up position and move your ass up to straighten your back. You will feel the abs tense. Hold this for about 30seconds if you can, and gradually get longer as you work at it. You can also do it on your side, holding yourself up with one arm. You should feel this oblique one more prominently. You can probably find a better description somewhere else on the net if you don't get what I'm waffling on about, haha.
stand on one foot, then close your eyes. its harder than it sounds. when this is mastered for both feet, try changing feet with the eyes closed. also, in a pose like what the karate kid is famous for, if you imagine your self being lifted up, balance improves. when i was doing kung fu as a lad, i couldn't keep balance for more that a few seconds when trying to do a slow high kick. the instructor simply said: do it, and imagine yourself being lifted up. it worked a treat.
