You have to MAKE him respect your space, because he clearly doesn't know better because he hasn't been trained any better.
Clinton Anderson has some great ground work DVDs. I highly recommend the investment. It teaches the horse to respect your space, but it also enables the handler to move and control any part of the horse's body, without even being near that body part.
Yes this video is about trailer loading. But trailer loading has to do with ground work. Watch it, as he goes through some of his ground work exercises.
It's is best to use some sort of whip or stick, essentially to "make your arm longer".
One of the first things you want to teach your horse is to yield their hindquarters. This disengages the hindquarters to stop the horse's movement. Start by standing on your horse's left side, facing the horse. Keep ample slack in the lead rope -- you aren't "forcing" him to stand anywhere. You want to allow him to make a mistake so he can learn from it. You'll want to keep your left hand holding the lead rope up by your head, so that if the horse crowds your space, you can wave your hand at his head (or smack his head, if need be) to get him out of your space. He is not allowed in your personal bubble, unless you invite him in. To ask him to disengage his hindquarters: 1) You want to "glare" at his hindquarters with your body language. 2) If he does not move them, then point your stick at his hindquarters. 3) If he still does not move, start tapping his hip bone softly with rhythm 4) If he still does not move, very gradually start tapping him harder. 5) Do NOT stop tapping until he moves. HOwever, the very instant he ever so much as shifts his weight to his right hind leg, you immediately need to STOP pressuring him. Relax your body stance and remove the stick. Timing is very critical. If you get your timing wrong, he will learn nothing. And remember, if he gets his head into your personal space during any of this, use that left hand holding the lead rope to get him out of your bubble.
When he gets good at shifting his weight when you ask, start continuing pressure until you get one small cross-over step (the hind foot nearest you should step in front of the other hind foot). When he is consistent with one teeny step, start asking for one large step or two small ones. ETc
Make sure you work both sides evenly.
You don't need to drill him for an hour un til he gets it right. 10 to 15 minutes of ground work a day is plenty. And you'll progress plenty fast.
Another great tool to teach this horse is to back up away from you when you simply jiggle the lead rope. Start by standing in front of your horse, facing him, when plenty of slack in the lead rope. 1) You want to "glare" at his chest with your body language. 2) If he does not move, start wiggling and jiggling the lead rope 3) If he still does not move, start tapping your stick on his chest, or in between his front legs. 4) Gradually tap harder until he shifts his weight backward away from you. Immediately stop pressuring him and praise. When he gets good at that, then continue pressuring until you get one small step backward. When he gets good at that, ask for 2 steps backward. Eventually, all you'll have to do is wiggle the lead rope to get him out of your space.
These are just two of the exercises Clinton uses. It's all about being able to control the horse and teaching him that your personal space is your personal space!!