According to a major study done by the U.S. National Institute for Literacy, guided oral reading (reading aloud) is THE best method of teaching fluency in reading --- here is their summary on the subject (emphasis is their own):
"Fluency is the ability to read a text accurately and quickly. When fluent readers read silently, they recognize words automatically. They group words quickly to help them gain meaning from what they read. They read aloud effortlessly and with expression. Fluency is important because it provides a bridge between word recognition and comprehension. Because fluent readers do not have to concentrate on decoding the words, they can focus their attention on what the text means.
"Fluency develops gradually over time and through substantial practice. At the earliest stage of reading development, a student's oral reading is slow and labored because they are just learning to "break the code" - to attach sounds to letters and to blend letter sounds into recognizable words.
"Fluency is not a stage of development at which readers can read all words quickly and easily. Fluency changes, depending on what readers are reading, their familiarity with the words, and the amount of their practice with reading text.
"Here are some of the highlights from the evidence-based research on fluency instruction:
"Repeated and monitored oral reading improves fluency and overall reading achievement. Students who read and reread passages out loud as they receive guidance and feedback become better readers. Researchers have found several techniques to be effective including the reading and rereading of text a number of times (usually four times) until a certain level of fluency is reached, and practicing oral reading through the use of audiotapes, tutors, peer guidance, or other means.
"No research evidence is available currently to confirm that instructional time spent on silent, independent reading with minimal guidance and feedback improves reading fluency or overall reading achievement. Although this activity's value has neither been proved nor disproved, the research suggests that there are more beneficial ways to spend in-class instructional time."