Hang bags of water around to keep flies away (opens new window). Coins or bits of tin foil can be used inside the bags.

Ideas of how it works include:

• refracted/reflected light confuses them
• their magnified reflection scares them
• they look like a rival insect nest
• they look like a predator's eyes.

Of course, the first question that you have to ask is "does it even work?". The only scientific test done, at an egg farm and in indirect sunlight only, found flies were more likely to visit if these fly deterrents were deployed.

Mythbusters also tested the idea in 2010 (Episode 156). From mythresults.com:

The Build Team made a rig consisting of three chambers separated by trap doors. The first chamber would hold the flies, the second would hold some rotten meat, and the third would hold both rotten meat and a bag of water. They then released over 5,000 flies from the first chamber and waited to see how many flies would go into each of the other two. After the chambers were sealed off, they let all the flies die and collected the corpses to weigh for comparison. The chambers with and without the water contained 35 and 20 grams of flies, respectively, busting the myth.

Random internet quote:

I first saw this at a diner about 15 yrs ago. The bags are still there. I guess it works. I don't remember seeing any flies anywhere.

This is much like the idea of leaving a plastic bottle filled with water on your lawn to keep dogs away (opens new window).