The best way to teach your child to read is to read to them - a lot.
I can highly recommend
The Read-Aloud Handbook, by Jim Trelease. It has some excellent suggestions.
We read to our kids until seventh or eighth grade (a kid's aural vocabulary is always more advanced than their reading vocabulary).
I'm firmly convinced that reading to our kids regularly was one of the two best decisions we made as parents. (The other was no tv on school nights)