Progressive Phonics is a FREE all-in-one reading program. Registration is required. Users download the books (which can be printed or just read online) and worksheets for each lesson. There is also a discussion forum.
Starfall is a popular online favorite geared towards preschool- 2nd grade level students. The site uses a systematic phonics approach to learning and is also a popular educational alternative to online video games. The majority of the site is FREE however an expanded members only area is also available which also offers math lessons/games.
Owl and Mouse Lettersounds is free educational software you can download to help your child make the connection between letters and the sound they make.
Free Reading is a open source reading intervention program for students preschool-6th grade. The FREE program covers 40 weeks of instruction (30 min day/5 days a week)On the site you can download resources including index picture cards and use a wordlist generator
If you would like to know what grade level your child is reading at you can download the FREE Reading Competency Test from the National Right to Read Foundation.