Garran: Use one of the auto-combat modes for the Avatar as a default - manual control just doesn't work very well, and you can always override the auto-attacks by issuing some other command.

While better armor will help your survivability somewhat, and increasing your stats (especially Strength, which also increases your health) will improve your overall combat effectiveness, you're unlikely to be able to just stand there and take hits for very long.

Judicious use of protection and healing magic (purple potions/Protection spells on one hand, and yellow potions/bandages/Heal spells on the other) is usually going to be necessary, unless you're dealing with opponents whom you outclass by a large margin. You can use all of these things during combat, so if you see a character taking hits (and especially if there's red screen flash) then hit Z or I to check everyone's health status and use bandages/potions to get their health back up.

While potions are expensive, bandages often aren't, and you can make your own by taking advantage of the crafting system available in the game. This is probably the single biggest thing you can do to help your group stay alive early on, when your party is relatively small and poorly prepared.

Other spells, while expensive in terms of reagent cost, can also help a great deal, as can 'harmful' potions. For whatever reason, the game (Serpent Isle definitely does this and IIRC Black Gate does as well) lets you use them on enemies as well as party members, so keep any poison (green), sleep (blue), and curse (blue-white shimmering - only found in Serpent Isle) potions you come across and use them on enemies that are giving you trouble.

If you are taking too many hits personally then you might also want to consider using a ranged weapon while keeping a few other party members on various melee options. It will reduce the likelihood that you get targeted by a large number of attacks all at once.