Research on Phonemic Awareness & Phonics
Research Findings by the National Reading Panel (NRP)
Phonemic Awareness (PA) is the ability to hear, identify, and work with the individual sounds which connect together to make words. In the past few decades, large amounts of research have improved our understanding of phonemic awareness and its importance in helping children learn to read. There are hundreds of research studies conducted on all aspects of phonemic awareness, and how it affects and benefits reading and spelling abilities of young children. The National Reading Panel of the US have stated that phonemic awareness improves children's reading and reading comprehension, and that it also helps children to learn to spell. Based on the research and reviews done by the National Reading Panel, they have concluded that teaching phonics and phonemic awareness produces better reading results than whole language programs.
When teaching PA, children are taught the smallest units of sound, or phonemes. During the teaching process, children are taught to focus on the phonemes, and learn to manipulate the phonemes in words. Studies have identified PA and letter knowledge as the two best school-entry predictors of how well children will learn to read during the first 2 years of instruction. In a review of phonemic awareness research, the National Reading Panel (NRP) identified 1,962 citations, and the results of their meta-analysis were impressive as stated in the NRP publication:
Overall, the findings showed that teaching children to manipulate phonemes in words was highly effective under a variety of teaching conditions with a variety of learners across a range of grade and age levels and that teaching phonemic awareness to children significantly improves their reading more than instruction that lacks any attention to phonemic awareness (PA).
Specifically, the results of the experimental studies led the Panel to conclude that PA training was the cause of improvement in students’ phonemic awareness, reading, and spelling following training. The findings were replicated repeatedly across multiple experiments and thus provide converging evidence for causal claims. 
As can be clearly seen, teaching children PA early on significantly improves their reading and spelling abilities. Furthermore, the NRP research stated that these beneficial effects of phonemic awareness teaching goes well beyond the end of training period. The NRP research also found that the most effective teaching method was to systematically teach children to manipulate phonemes with letters, and teaching children in small groups.
This method of teaching provides children with an essential foundation of the alphabet system, and a foundation in reading and spelling. The NRP has stated that PA instructions is a necessary component within a complete reading program.
Other Key Research and Findings
Below are two other studies done on phonemic awareness, and its effects on reading abilities. In a study involving children aged 6 to 7 years old, researchers found that the few readers at the beginning of grade one exhibited high PA scored at least close to perfect in the vowel substitution task, compared to none in children of the same age group who could not read when they entered school. The research also stated that PA differences before instruction predicted the accuracy of alphabetic reading and spelling at the end of grade one independent from IQ. Children with high phonemic awareness at the start of grade one had high reading and spelling achievements at the end of grade one; however, some of the children with low PA had difficulties learning to read and spell. The study suggested that PA is the critical variable for the progress in learning to read. 
Another study looked at PA and emergent literacy skills of 42 children with an average age of 5 years and 7 months. The researchers indicated that relations between phonemic awareness and spelling skills are bidirectional where PA improved spelling skills, and spelling influenced the growth in phonemic skills. 
It is clear that with the conclusions made by the National Reading Panel and other research studies on the benefits of phonemic awareness, children should be taught PA at a young age before entering school. This helps them build a strong foundation for learning to read and spell better.
1. National Institute of Child Health and Human Development. (2000). Report of the National Reading Panel. Teaching children to read: An evidence-based assessment of the scientific research literature on reading and its implications for reading instruction (NIH Publication No. 00-4769). Washington, DC: U.S. Government Printing Office.
2. Cognition. 1991 Sep;40(3):219-49.
The relationship of phonemic awareness to reading acquisition: more consequence than precondition but still important.
Wimmer H, Landerl K, Linortner R, Hummer P.
University of Salzburg, Austria.
3. Exp Child Psychol. 2002 Jun;82(2):93-115.
Emergent literacy skills and training time uniquely predict variability in responses to phonemic awareness training in disadvantaged kindergartners.
Hecht SA, Close L.