Ciao bella!
As far as I know all the UK reading schemes are phonics based (synthetic phonics)
Dd has a couple of sets of ORT readers (dire storylines, but...) and I've had the Songbirds recommended to me on here...
Moondog recommended an online scheme called Headsprout which dd is doing now, and is coming on in leaps and bounds- she loves the fact that it's interactive, and based on 'pooter games rather than on the dry and stilted Chip and Biff ORT stuff. Another site we've been pottering about on is Starfall, also recommended on here somewhere, not as fun as Headsprout- but free (Headsprout give you a couple of free lessons then you have to pay)
Definitely do it phonically, though, whichever way you decide to approach it. It's perfectly OK to teach her that the letter *names" are Ay Bee See etc, as long as you differentiate between names and sounds....
IIRC I started looking at the ORT stuff when dd was about the same age as Mini-Rosa, got some flash cards etc from ELC, magnetic letters for the fridge etc. There are also some good teaching-pre-reading-skills books around- workbook kind of things, lots by Oxford, M and S, Letts etc. Dd used to love doing those, joining up letters to the words they belong to etc...nothing too heavy, all play based. x