In an answer to the question "what should a site owner do if they think they might be affected by Panda?” Google Head of Spam Search, Matt Cutts has posted a video.
Matt said that one should write high quality content matching the level of content in published books and popular magazines. Talking more about high quality content, Cutts said that high quality is the sort of content that people enjoy. Something that they would love to read or content that you see in a published book or magazine that people refer to others.
He said that Panda was launched on February 24, 2011 and has been integrated into the "indexing process" this year. In this process, the algorithm is baked into normal ranking algorithms somewhere. The reason behind is that Panda algorithm now impacts a smaller number of websites and is thus safe to run in an automated way.
So, if you have noticed a drop in the traffic and you are not ranking high as you were previously, Cutts recommends that you should look at the content quality and improve on that. Matt has also given reference to a post by Amit Singhal: More Guidance on Building High-quality Sites.Matt Cutts on What Do if your Website is Hit by Panda!,