Read to your child and make the story come alive. Give emotion to the words on the printed page by using different voices to represent different characters. Let the children see the pictures as you read the book, if there are pictures in it. If not, let the children draw their own pictures to represent what they are hearing in the story. This gets them involved in the story on a more meaningful, interactive level.
Let your children act out the story. Tell them that if they read the whole book, they can put on a skit based on the story they have read, for your entertainment. You don't have to judge the performance—just enjoy it and know that the children have learned something from what they have read.
Allow the children to read at their own pace. Only help them when they truly need your help with a word. Do not let them get too dependant on your help. If they find their own pace, they will enjoy the whole reading experience much more than they would otherwise.
Let the children pick out their own books. Even if it turns out to be 10 pages long and mostly pictures, give your children the freedom to make their own choices. Soon enough they will start selecting books that are more substantial, just to make the fun last longer.
Reward your children with something they enjoy when they accomplish a certain amount of reading. For example, if they love to eat out, you could promise them a trip to their favorite restaurant. If they love playgrounds, you could promise a field trip to the park.
Set an example. The most important thing you can do to encourage your children to read is to let them see you reading! Read books you love instead of than watching TV or playing computer games. Read as much as possible; have lots of books in your home; talk about books you're reading; make reading an everyday activity ... and your kids will be sure to follow along.