The following are some steps from which you can try and get back your lost Google search traffic and recover from google panda hit:

1) Improve quality of the content from your website. Make sure the content is not a copy of another article. Having a paragraph or two lines as a quote is fine, but do try to make your content unique and it should not be copied from another location

2) Also make sure your site does not carry too many irrelevant or relevant ads. How much is too many are for you to decide. Keep in your mind the Content:Ads ratio when deciding on this and their placement. Do not place the ads next to one another, but rather space them out properly over your entire webpage.

3) External linking is also good. Everyone wants incoming links and there are some who just avoid giving out external links. What would the Internet be if everyone was to follow this logic. Google likes web integration. So where and when required, do not hesitate in placing an external link.

4) It appears that Panda now frowns on Keyword Stuffing, a practice bloggers love to follow. Maybe you want to avoid this now and just let the keywords or key-phrases appear naturally as may be required.

5) Check your website for broken links. If you use WordPress, then Broken Links Checker plugin is great! I used it and removed almost around 200 dead links from our different website. Your WP Admins Panel may freeze while it is running, but it does not affect site performance. If your website is large it could even take a couple of hours. At least that is what my experience was. If you do not use WordPress, you could check out Xenu Broken Link Checker. I had used it earlier for our website and it does a real good job.

6) Blog comments and forum posting sometimes have spelling mistakes, typos and grammar mistakes. So would that affect your search ranking?

Good writing matters tweet by Google recently. So you must ensure that you are using the correct spellings, grammar, and syntax while creating your posts. Use a spell-checker, etc to ensure this.

Says JohnMu, a Googler:

If users are creating content for your site, then I think it’s definitely a good idea to help them to create high-quality content, be that by providing a spelling checking mechanism, or by making it possible for other users or you to fix quality-issues as they are found. On the other hand, if these are comments or testimonials left behind by users, then I think it would be a bit weird to modify them. Would you like to have that happen to feedback that you leave behind on other sites? Personally, that would bother me a bit. As the site-owner, I think it’s fine (and usually expected) to make an editorial decision in whether or not a comment should remain on your site. Ultimately, it’s up to you do make a decision on where you want to draw a line.

So you may want to take a call on this. In case of Blog comments, you can always make them No-index.

7 ) Remove your poor quality pages. Have you copy-pasted bulk stuff anywhere? If so go back and try to re-edit those posts in original wording. Or maybe you could simply set it to No-index. It’s very important that you ensure that you have no duplicate content. Use the canonical tag to return one preferred URL location. That is, www.mysite.com as compared to mysite.com or mysite.com/home.asp, or www.mysite.com/index.html, etc.

Says Wysz from Google:

If you believe you’ve been impacted by this change you should evaluate all the content on your site and do your best to improve the overall quality of the pages on your domain. Removing low quality pages or moving them to a different domain could help your rankings for the higher quality content.

8.) Create additional channels for your content distribution. If you are not active on any social media sites, get involved with some like Facebook, Twitter, etc. Make sure that the Share buttons are clearly visible in your blog posts. Do check out Google’s +1 button too, in case you are interested.

9) Avoid posts with little content. I have decided that as far as possible, we will ensure that posts on our websites will have at least 300 words. It seems, that Google feels that if content is less – it deserves to be ranked lower.

10) Speed matters! So make sure your webpage does not take too long to load. Optimize it to load faster. If it takes more than 5 seconds you really need to have a look at it. The Google Web search team had announced that it now considers the speed it takes for a website to load when ranking it in Google search results on Google.com.

11) As a matter of good housekeeping I also suggest you remove the Not Found URLs of your website, from the Google Search Index.

Once you have made the changes you think are required, you might want to put in a Re-consideration request to Google.