Phonemic awareness is one of the best predictors of future reading and spelling success. Research shows that children who enter kindergarten with strong phonemic awareness learn to read quicker than their peers without these skills.
Phonemic awareness is the understanding that words can be broken apart into individual sounds (phonemes). Phonemic awareness skills then, involve focusing on and manipulating phonemes in spoken language. It is important to note that phonemic awareness is an auditory skill; children do not need to know letter shapes and sounds (phonics) in order to develop basic phonemic awareness. As children develop an understanding of the sounds that letter symbols make, phonemic awareness and phonics skills are often practiced simultaneously.
Phonemic awareness falls under the umbrella of phonological awareness, a broader term that refers to an awareness of all the parts of a word, not just the individual phonemes. Phonological awareness includes skills like rhyming and dividing words into syllables, while phonemic awareness includes skills like blending and segmenting the individual sounds in words.
Source: Read 20 Arizona http://www.azed.gov/read20/read-aloud/