Correcting Your Child's Bullying Behaviour

How can we prevent our seven-year-old son from becoming a bully? I've noticed that he can be very pushy and often tries to dominate other kids. He always wants to be the "winner" — it's as if he has a need to prove himself. When provoked, he retaliates fiercely and has hurt other kids in the past. He's small for his age and is generally very popular at school, but I wonder how long that will last.