Great question! As a teacher, I've seen how much of a difference it makes when children are well-prepared at the preschool level. Here are some things I would recommend:

1. Start with the very basics of reading. For example, show the child that when you read, you always do so from left to right. Read a simple story to them while pointing to each word.

2. Ensure that the child knows his/her alphabet very well. Not only saying it, but recognizing each letter is an important prerequisite to reading. Starfall.com is a great website where these skills can be practiced for free.

3. Emphasize phonetical sounds. First start with the vowel sounds because they are most important.
If you had the time, doing a different letter a day for about a month would be great. Focus on the different sounds each letter makes, words with that letter/sound, and activities. One activity that I like for this is a sound scavenger hunt. Give the child some magazines, glue, scissors, and poster board and have them find as many things that contain a certain sound as possible. You could do multiple sounds at once and divide the board into fourths.

You can find more phonics activities and resources at these links:

http://www2.scholastic.com/browse/article.jsp?id=4494

http://childparenting.about.com/od/elementaryreadin1/a/phonics.htm

http://www.teach-nology.com/teachers/lesson_plans/language_arts/phonics/

4. Read to the child as much as possible. Not only books, but read labels and signs when you're out and about. As you learn a new letter or sound, encourage the child to find things that use it to connect their learning to real life.

5. If you don't already have it, I would highly recommend getting a LeapFrog learning system. I love their Tag reading books, and I've seen it help so many children with their reading. It is definitely worth the $50. They have lots more awesome reading resources as well.
http://www.leapfrog.com/en/shop/3-5_years.html

6. Let the child see you and others reading for enjoyment. The earlier you can instill in them that reading is fun, the better.

Good luck!

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