Let your child tell you a story. Write their words down on a piece of paper. Let the child (if they want to) illustrate their story. Then let the child read their own words back to you.
Let the child create many books to read. Take printer paper and cut it in half, fold the paper to form a little book. Maybe you could make a cover out of construction paper - the child can illustrate that too.
I think this helps them learn to read - because they are reading their own words.
And making books is fun! You have the crafty stuff, art, reading, and grammar in one swoop.
Just telling a story helps with language - formation of sentences etc.