Young children really learn best through play, but we have heard from a lot of parents who are interested in introducing some of the basic concepts of phonics to their kids. One quick tip, is that learning the proper sound a letter makes is far more important than learning its actual name. For example the letter A sound should initially be taught as 'ah' rather than 'eh' (so C-A-T should sound like k-ah-t).
If you would like to learn more, here are some of the main phonics systems followed by schools in the UK.
Read Write Inc (by Ruth Miskin)
Letters and Sounds