Statistical machine learning methods are employed to train a Named Entity Recognizer from annotated data. Methods like Maximum Entropy and Conditional Random Fields make use of features for the training purpose. These methods tend to overfit when the available training corpus is limited especially if the number of features is large or the number of values for a feature is large. To overcome this we proposed two techniques for feature reduction based on word clustering and selection. A number of word similarity measures are proposed for clustering words for the Named Entity Recognition task. A few corpus based statistical measures are used for important word selection. The feature reduction techniques lead to a substantial performance improvement over baseline Maximum Entropy technique.