Listening to Japanese materials such as music and television plus talking tends to help the most.
I know this area has been a struggle for me, but my teacher gave me a suggestion that I now do daily that probably helps me the most: 聞き取り.
Essentially, it’s listening to a small bit of dialog (one two two sentences) and writing it down as you hear it. You have it played three times ideally with the second time at a significantly reduced speed, and then once you’re done with three times, you check with the script to see your accuracy.
For myself, I go through it usually a little more than three times because my writing isn’t as fast, but I’ve gotten so much better at picking up words as a result making me much more effective at understanding my conversational partner, allowing me to focus more on what I want to say instead in a smoother fashion.
Here’s a starter list to go through https://youtube.com/playlist?list=PLSTleOVAvEdqontIJWYKcETdxUvVY_47p