Hi there. She sounds like she is ready to teach to read. I recommend Sing, Spell, Read and Write. Only takes just a few minutes each day. You can purchase it from any store that sells only school supplies, i.e. School Box. I've had friends who have also used Teach your child to read in 100 easy lessons, but my children found it very boring, and it wasn't all phonics based.
If you get SSRW, I'd go ahead and get the 1st grade version. It all comes in a kit. The first book is the OFF WE GO book (ISBN - 1-56704-504-9). This book includes about 4 pages for each letter of the alphabet. Your child learns the sound of each letter, how to pick out the sound in words, learns how to write the letter...it also involves cutting and pasting. Even if your young child knows her letters, don't skip this book. One thing I learned over the years is that if you skip the easy stuff and start with the harder stuff, your child learns that school is hard and therefore not fun. It is important to start off with things that might be review for your child.
After 27 days, you finish the OFF WE GO book, and can begin the RACEWAY BOOK (ISBN 1-56704-505-7), which is included in the kit. It is so easy to teach, and fun too. My child loved the songs she learned, and still sings them. She'd read the song and sing it at the same time: "OR for orbit, SH for shell, sing along and learn this well. CH for chocolate and for child, ER IR UR, the rooster's wild..." Anyway, in a couple of days, your child can learn the first part of the song, and know 12 of these sounds. There are activity sheets in the book to reinforce these new sounds learned, so your child can read words w/these sounds quickly. BTW, one thing that helped me is putting the CD in the car. My child learned the songs much quicker by listening to them while we ran errands each day. This helped her learn to read quicker.
You can take this curriculum as far as you want. You can just do enough to teach your child to read, or....you can do the whole year's worth of curriculum which is all in the kit. At the end of the year, your would be learning how to read, write, and spell words like pneumonia, lieutenant, psychology, etc... And it's all fun. Check it out. I've used several curriculums, and to me, this is the easiest to teach, easiest to learn, and the most fun to learn. And school should be fun, especially at a young age.
teaching techniques 
Linear Mode
