I have a 3 year old parson russell terrier which has progressively got worse in his behaviour every time i go past another dog in my area when he is on a lead he goes crazy barking and lunging which is very embarrassing. In certain situations like when on a lead or if he's poking his head out the window of my pick up and someone strokes him his tail goes between his leg and his back arches then he starts growling

He sounds like a very reactive dog. What's he like when he actually gets to meet a dog?
Try walking him in the other direction as soon as he begins to react negatively to the other dog, and work on focus work so that you can build it up to a point where he'll break focus with the dog to concentrate on you. Body blocking works well with this too. In all, you want to reward the behaviour you like and walk him in the opposite direction when he shows what you don't like. Also keep him interested; my little girl still likes to bark if she sees a dog across the street, she just wants to say hi and doesn't lunge (in fact, she picks up her feet like a show pony), but never the less it's a behaviour I don't want, so we keep walking a bit faster and I keep her attention with lots of noises. It works very well for her and we can walk past dogs and people without a bark from her as long as I'm one step ahead!
I'd also google the 'look at that!' game as it worked wonders when my dog was reactive against others. He used to spot a dog across a field and go mad, barking in angst to say hello. Now I can walk him off lead past another dog and he won't pay much attention, and days out at shows are bliss as he ignores most dogs once he's calmed down, walking past them is the most normal thing in the world. It takes a lot of work but you will get there!

Without seeing how he is behaving I would not want to give detailed advice however this is a dog that was bred to work and will require loads of activity and stimulation unless you are using him for vermin control. Was he bred by a pet home or on a farm, if he was bred by a pet owner then perhaps they may be able to help you if not then perhaps you should ask the vet to give you the name of a reliable behaviourist or trainer.