Teach your child the alphabet, if she doesn't already know it. Some children can sing the ABCs, but find out if they know the appearance of each letter. Some free programs online can teach your kid the ABCs. Learn Your ABCs and Starfall ABCs are examples of these.
Teach him the basic sounds of each letter. These would be the most commonly used sounds associated with the letter. Reading Kingdom is a paid online program that can do this. Phonics Learning Game and Starfall ABCs are free online resources.
Move on to harder concepts after your child is familiar with the easy ones. Teach about the difference of soft and hard consonants, short and long vowels and silent letters in words. Use Starfall's Learn to Read portion of the free online resource. It includes games and instructional videos.
List sight words that are listed in early reader books for kids who are your child's age. Sight words are words that would likely be known by a child in that age group without the need for them to sound it out. They are also used often; "the," "was," "says" and "from" are classics. Use some words that sound the same but are spelled differently, such as "to," "two" and "too." You can access an online resource for this type of exercise from Sight Words with Sampson, which has four levels and 28 lists of sight words. Each of the lists has eight sight words.
Use early reader stories so your child can practice his skills. Encourage him to read as much as possible to improve his skills. Build up to more difficult stories. Starfall's Learn to Read resource has early reader stories. Advanced reader sections are available in the "I'm Reading" portion.
Participate in interactive reading games online with your kid to help reinforce the rules. Play timed games so she can show you how she can perform under pressure.