Most of us initially learn to read using a phonetic approach. That is, we learn to sound out words, and eventually recognition of the word becomes automatic and we are sight reading the word. Many children have difficulty taking words apart into their component sounds. The earlier this is remediated, the better, because children learn new auditory tricks more easily than adults and younger children learn more easily than adolescents. Those with a history of ear infections are more likely to have difficulty recognizing particular sounds.
We are all deaf to many of the sounds used in other languages. Babies are born with neurons wired to respond to the sounds of all human languages. If children don't receive sufficient exposure to these sounds, then the neurons assigned to respond to these sounds are pruned away. High repetition of the difficult sounds can often improve phonological awareness in children. Programs like Earobics can be used for this. (Free online Earobics program.)Rhyming games and fun activities that take words apart and put them back together are great developers of phonological skills (try starfall.com).
Some children would be better off jumping to a hybrid of sight reading from the beginning because of very weak phonological skills. With this approach, rather than sounding out words from phonemes (the basic auditory building blocks of words) they use syllables as the building blocks. For most children, though, training in phonics is the best route.
Reading also requires letter recognition. Many children (and adults!) are unable to do two frustrating and challenging novel tasks simultaneously. When we ask a child struggling with letter recognition to practice reading, this is asking for multitasking, which means asking for problems. For most children with letter recognition difficulties, the first step towards letter recognition is practicing left and right until this knowledge is automatic. Then verbal cues (if they easily guide their behavior verbally) can be memorized to minimize & correct letter reversals.
Reading difficulties are best caught early before psychological reactions begin to compound the problem. For older students struggling with reading, reading material must be easy enough to allow for mastery, yet the content must be age appropriate. Consult a librarian about high interest but low reading level books. Using a Talking DIctionary is a great compensatory strategy that forces interaction with the unknown word, thus improving reading.