I also get this a lot, it really is annoying, I understand.
You might like to try the Thomas Richard's CDs, he uses a technique called Slow Talk which does help alleviate the pressure of having talking.
*Thinking* of things to *say* is a different matter and is easily solved with a bit of practice, I used to have a big problem with it. Basically people will throw you clues, 90% of the time people will throw you clues, because people love to talk about themselves.
So if someone says they were shopping, think of all the possibilities of that, what did you buy, who did you go with, was it the big mall over there, have you ever been to Store X. If they say I was in my garden, have you got a big garden, were you helping your parents? If they say I was at a club, ask what are the clubs like here, what are the doorstaff like cause where I'm from they can be rude at times, did you have to dress up to get in was it one of those places, what was the music like, did you get to request any songs, did you go with a lot of people.
You get what I mean, just practice that - the thinking of something to say comes easy. Getting the confidence to speak is another issue, as I said try Slow Talk, deep breaths, and practice. The more you do it the better you become at it, that applies to everything.
If you **** it up, there's another five billion nine hundred and ninety-nine million nine hundred and ninety-nine thousand nine hundred and ninety-nine people out there.
Britisharrow gives some good advice.
Also, don't think of things to say while the other person is talking, don't think about eye contact or posture or body language.
Just concentrate really, really hard on what they're saying, and ask questions. Next time you meet that person, you can just bring up something they mentioned before, and jump start a long chat.
This is a common symptom of anxiety. I think there are a few reasons why it happens. I would say to follow what the others have said, and also try to relax if you can. Try not focus on yourself, but focus on what they are saying, and think of things that are related to that if you can also relate.
There is a disorder called selective mutism which may be similar to what you're experiencing. I get the same feeling sometimes, especially when there is an awkward pause in a conversation. I just keep thinking of how awkward the conversation is, and I can't seem to think of anything else.