Oh, and for true safety, browse on a non-Windows OS.
If you want to use windows anyway, you could browse from a virtual machine. I had a friend who use the virtual-machine-desktop-integration feature to set it up so that when he launched his 'browser' it really launched his browser within a VM so that any compromises or etc were of the virtual machine. Combine that with having the VM not save state on shutdown (so it always started up 'clean') and he could browse with no worries. (And no history, which I would find annoying but he didn't mind).
I think the primary rule is to browse on an non-administrator account.
If that's not possible in your case, you can either create a limited one and use runas to start the browser under it or use DropMyRights or a similar application.
Disable Flash for that configuration, since this plugin seems to be a major security hole, considering as recent as yesterday's zero-day flaw news.
Most of safe browsing is just using common sense. Don't visit websites that spam you with pop-ups. Don't click on "Claim your free gift" ads. Don't give away sensitive info unless you trust the website and are using https. Be smart about passwords and don't use one password for all websites.
You will be generally infected when executing exe/bat/zip/ppt files download from not very clean web site...
So, my main advice is that you should try to avoid downloading and executing files downloaded from website that you don't know/trust.
If you need to go to the "underground web", I suggest you to use a Virtal Machine (like VMWare, Virtual PC, VirtualBox and so on) that you may delete if you think it's not clean anymore (or revert via use of snapshots).
In addition to the Firefox/NoScript/AdBlock recommendations already here, I add Sandboxie and OpenDNS configured to block domains I don't want to see anything from, such as doubleclick. The criticism that NoScript destroys the beauty of the internet is not valid. It is very easy to white list sites that you trust.
I always suggest OpenDNS, ThreatFire and an AV like MSE or AVG. Doing this as well as keeping your OS and all software up to date is the best way to go I think. Use things like FileHippos update checker and PSI from Secunia and you should be set to go.
Granted, there are many legit sites in this list that support click-through advertising and such, and you need to go in and comment-out those sites, but I have found that a hosts file works very well at blocking ads as well as malware