Definitely do the ABC section of starfall.com on a regular basis. Also, underline words with your finger when you are reading. I found Dolch sight word PowerPoints very useful with my second child. You can download them at http://www.mrsperkins.com/dolch.htm.
Hi, you can also start off with LR and LM… and supplement with Preschool Prep (I LOVE these videos), my son learned all his colour/ shapes and some sight words from it very quickly. Also has Letters/Numbers/Phonics. 12mo can start off with letters.
If you’re up to the work, you can also try manual flashcarding (Doman method), which is great as you can carry it around wherever you go and it only takesa couple of minutes each time. That’s great Right Brain Stimulation.
And lastly, don’t forget Play, Play and Play… some structured, and some unstructured. Works wonderfully for Fine/Gross motor skills and Social skills.
I think that combining multiple formats and programs is the most efficient way. We use a combination of Your Baby Can Read DVDs, books and flash cards along with following Little Reader program and reading books together. The suggestion to follow the words you’re reading with a finger is a great one because there is some research showing that this helps kids to learn to read faster. Good luck!