Step1
Open your music. Lay it out on the music stand in front of you on the piano.
To review, first find "Middle C" on the piano. Remember that the "Treble Clef" (the right hand staff on the music) has its first line on the E directly above middle C on the piano, and the lines spell out E-G-B-D-F (going up the staff). The spaces in between the lines spell out F-A-C-E (going up again.)
The "Bass Clef" (the left hand staff on the music) has its first line on G an octave and a half below Middle C on the piano, and the lines spell out G-B-D-F-A. The spaces in between the lines spell out A-C-E-G.
Make sure that you are comfortable reading all these pitches on all of these lines before you continue. You can quiz yourself to test your comfort by randomly pointing to a note printed somewhere on the Treble or the Bass staff and seeing if you can identify it within a second or two. Once you've accomplished this level of proficiency, you're ready to proceed to Step #2.
Step2
When looking at a new piece of music ("sight reading" it), the first thing you need to identify is the key signature and the time signature of the piece. After doing that, remember to take a few moments and look over the entire piece - how much do the hands move out of their original position? Are there many accidentals sprinkled throughout the music, or just a few (or none)? Do the hands ever cross or jump up or down an octave? Try and take in all of this on a broad scale.
Step3
Having examined the whole piece, now begin to break it down into its smaller parts. Look at the rhythms: What are the rhythmic patterns that occur within the piece? Do you see repetitions that occur over and over again? Do the hands do the same thing at the same time?
Then, take a loot at the notes themselves: are they mostly single, running notes, or do they jump around in intervals? If the latter, are the intervals regular and repeated in a pattern? Perhaps the notes are clustered together in chords- do you see a pattern within the chords? (for example, are they all comprised of stacked thirds, or do the intervals within the chords change from chord to chord?)
These are the kinds of questions that skilled sight readers and trained musicians ask themselves when approaching a piece for the first time. Remember - you don't read books one letter at a time ... you read whole words and even sentences in one fell swoop. Why would you approach music any differently?
Step4
And finally, we come to the two most important elements in developing sight reading ability: take it slooooooow, and practice practice PRACTICE!
Never sight-read faster than your brain can process all of the information. If you practice "stuttering" (repeating notes, starting and going back over and over again on the same passages), you'll never train your brain or your eyes to constantly move forward. Sight reading isn't about perfect - it's about learning how to read music quickly and efficiently so that you can learn it quickly and efficiently. And the more you practice correctly, the better you'll get.
Happy trails, and make that music!