In the Foundation Stage at Bearwood we follow the Letters and Sounds Phonics programme. This link has the scheme as well as plenty of resources:
In the Nursery, children do Phase 1.
By the end of the Autumn Term, Reception children will have learned all the sounds and tricky words from Phase 2.
By the end of the Spring Term, Reception children will have learned all the sounds and tricky words from Phase 2 and Phase 3.
In the Summer Term, Reception children will begin Phase 4. Phase 4 focuses on applying the sounds from the previous phases in more complex ways.
Children need to know the letter names and the capital letters, as well as the sounds.
Here are links to the sounds and tricky words for Phases 2, 3 and 4:
Many interactive phonics games can be found on PhonicsPlay:
Letter formation is also important, especially in preparation for Year 1. Here is a poster with the correct pre-cursive letter formation: