I got this from the KH wiki
To effectively level up Limit Form, equip as many Form Boosts as possible before engaging in battle, including Oathkeeper, and repeatedly use the Sonic Blade limit, which costs the least amount of MP to use, until you have no MP left. Return to a Save Point to recover your MP before returning to battle. Repeat the process until your Form gauge is about to run out, then leave the world and return to refill the Drive Gauge to maximum. Continue in this way until Limit Form reaches the level you want.
As this form is exclusive to Kingdom Hearts II Final Mix, it is recommended to make use of all the additions that are exclusive to Kingdom Hearts II Final Mix to level up Limit Form: the best places to level up are in the Cavern of Remembrance, where there is an abundance of Heartless, and in the Treasure Room in Agrabah, where Mushroom No. 5 can be found. The latter is recommended as the player has the benefit of a nearby Save Point, and can always use it to return to the World Map if Sora's Drive Gauge is low.
Because Limit Form doesn't require any party members, the Battle of the 1000 Heartless can be very effective to level up.
Another good way to level up this form is to go to the Altar of Naught if the player has defeated Xemnas's first form. Exiting the Altar of Naught will lead to Ruin and Creation's Passage. By using Limit Form when the Nobodies, many of whom are Berserkers, appear, Limits can be used until all Nobodies in the top area leading to the Altar of Naught are defeated, or the MP gauge runs out. Entering the Altar of Naught will immediately fill up the Drive Gauge, and the player can repeat this for a simple way to level up Limit Form.