My son took a martial arts class that dealt with this very issue. At the completion of the course, he was given a pocket card entitled "How to defeat a bully without fighting:. It reads:
1. Make friends - Treat the bully as a friend instead of an enemy. Kill them with kindness.
2. Use humor - turn a threatening situation into a funny one.
3. Walk away.
4. Use trickery- use your creative imagination to resolve the conflict
5. Agree with the bully - let the insults go without fighting back.
6. Refuse to fight - the winner of the fight is the one who avoids it.
7. Stand up to the bully. Just say, "NO".
8. Scream/Yell - a powerful shout can end conflict before it starts.
9. Ignore the threat.
10. Use authority - tell a teacher.
The children were then told that if they tried all 10 steps and the bully was still on their case, THEN they could defend themselves with more force (or fight back).
This is a real tricky situation, I know. I hope this somehow helps you.