Hi lawanz,
 
Sorry your son is struggling in this way. I hope a reading expert will write an answer as well but I thought I'd give you my perspective as a fellow mom of a seven year old boy.
 
First, I think you're doing exactly the right thing by reading with your son every night. When my son was just emerging as an independent reader, one thing he really liked was for us to take turns reading pages in a book. He'd read one whole page, and then he could "take a break" while I read the next page out loud to him. That worked really well for us.
 
I think it would really be a mistake to insist that your son start pushing to read "faster". If he's forced to read faster, but then can't understand or enjoy what he's reading, I think it will make him start to dislike reading which will be a huge step in the wrong direction. I think it's much more important at this age for him to gain confidence as a reader and to learn to love reading than to be a "fast" reader. That may mean reading very "easy" books (that might be on a first grader or even kindergartner's reading list). I also think it's really important that he has access to lots of books that are about things he's interested in. If he's excited to find out what happens next in the book, and he's reading at a level he's comfortable with, he'll naturally start to read faster!
 
I would really try not to let him stay focused on his teacher's suggestion that he should have been held back in first grade. Maybe that's true, but it doesn't mean he can't be successful in second grade!
 
He's lucky to have a mom like you who is so interested in his success and who is spending the time with him to help him get through this. Congrats and good luck!
 
Kat

When you say read with him, do you mean read to him, or sitting side by side? I think that's the key thing, that you both look at page together, and now and then point at letters and syllables, so he knows directionality, syllables, and then letters. Stroke the letters, stress the sounds. Also, use poetry and songs, things he can or has memorized.

lawanz
Reading is a skill just like any other. And when you do not have the basic skills then for some children trying to gain the skills becomes worse than not trying. Imagine you were learning to play tennis. How motivated would you be if the ball never went over the net? It wouldn’t be much fun would it, especially if the other player was getting stressed about it.  
 
So the key is to relax yourself.  Find ways to have fun reading in different situations.  Reading doesn’t just have to be sitting down with a book.
 
If your child is struggling to read and is spending more time stumbling over the words try reading the book to the child first. Then let your child have a go at filling in some of the blanks that you leave.  Then try taking turns reading a page or line.  Make sure the book is about something that the child is really interested in. Try and find interesting facts books on a topic they enjoy such as sharks, dinosaurs or soccer.  If the subject matter is interesting then your child is more likely to want to master the skills to decode the information.
 
There are lots of tools available online that can support your child’s reading skills whilst they are having fun. Educational games can improve language development, word recognition or spelling. Kids usually love using the computer and game based learning can be great fun as well as educational.
 
Ebooks that are animated and read the story aloud as the child follows the words can present reading in a different medium which is removed from the normal associations they have with sitting down to read a book.  You can also let them master the tool themselves to develop their self confidence.  Look out for books where emerging readers can have a go themselves and click on a word to hear it spoken, an example is below.
 
Try playing word games, like word snap or making words out of different letters.   These can be made at home for free and introducing the fun element of play can engage a disinterested reader.
 
Let your child write their own stories and print them out.  You could illustrate the story using images available on the internet, from magazines or let your child draw the pictures themselves. Your child will love showing and reading their books to anyone who will listen! If your child is not a confident writer, then write or type the story out for them.  
 
Use different setting to read eg reading a recipe as you bake cookies, reading the instructions to a game.
 
My own son struggled with reading when he was your son's age. Boys are often slower than girls at picking up reading skills. So have patience, make reading activities fun and varied and I am sure he will develop his skills and develop a love of reading.