I'd recommend the 'accuracy task vs fluency task' approach.

When you are planning your lessons decide at what times you are trying to promote fluency and at what times you are trying to promote accuracy.  Correct mildly often during the accuracy focus, and only in extreme cases (eg. when conversation breaks down due to misunderstanding) correct during the fluency focus.

For example, if it was a lesson on family, it might be like this:

1. Lead In - light chat about the teacher's family.  Focus - fluency (no correction)
2. Vocabulary - teacher introduces new words, checks that Ss understand the words, drills pronunciation and has Ss write the words in their books.  Focus - accuracy (correction of pronunciation and spelling)
3. Controlled Practice - Ss draw cards with pictures of family members and make a sentence using the word for that family member.  Focus - accuracy (correction of pronunciation and use of correct word for that picture)
4. Freer Practice - Ss draw their family tree and use it to talk about their families in small gropus.  Focus - fluency (no correction)
5. Review/Follow Up - teacher puts 4 mistakes he/she heard during the Freer Practice on the board and gives Ss a couple of minutes to try to correct the mistakes themselves.  Focus - accuracy (correction of those 4 mistakes only if Ss can't provide the correction themselves).