We use a technique called repeated reading for English. You select a small passage (paragraph or sentences) and repeatedly read the selection until you can read it with no mistakes. With my children, I usually model the reading of the passage to let them hear when I am pausing, emphasizing certain words, etc.
I have found that repeated reading works very well with increasing fluency in Arabic as well (for my children as well as myself). We have been reading from Suratul Kahf every Jumuah. We started off with the first five ayaat, then moved up to the next five, etc. I notice that the ayaat that we have read repeatedly over the year and a half we have been reading it, are more fluent and we make less mistakes. The newer ayaat are choppy at first.
For using repeated reading for Quraan, I find that it is best to pick ayaat that you have not memorized, otherwise, when you read, you are pretty much going upon what you have memorized.
For more tips on repeated reading, you can check out my reading skills page: http://www.talibiddeenjr.com/la_readingskills.htm