Marshall,
I don't know the best way to do it, but I basically attacked it with brute force. I freestyle every day for about an hour or so. I do it the entire time that I'm in the shower, usually for 15-20 minutes before, and also most of the time when I'm in my car alone.
At first you will be totally useless and unable to come up with two lines that rhyme on the fly. After a few months you'll be able to rap for a few seconds at a time, probably mostly regurgitated thug stuff you've heard on the radio. It's easy to rhyme that stuff.
Later you'll start being able to rap about any topic (try rapping about what you see as you walk or drive around), rap for 30 seconds to a minute.
Then finally you'll be able to rap indefinitely (basically ) and will start being able to do more complex stuff like inside rhmyes. I'm sure it only gets better from there, but that's basically where I'm at now.