I tend to agree with Dude. If your little has the perfectionist bug, she may be unwilling to try for fear of failure. This is a hard thing in really small children as it's impossible to rationally explain that failure is part of learning. She may not want to show you she can read until she thinks she has it perfect.
My son, now 8 had it bad. I spent lots of time modeling making mistakes, then fixing them to learn. Playing "Uh, Oh Look what I did wrong" then correcting it without consequence. I would let her take her own time, read if she wants to or not. If you read aloud, you can easily screw up a word that you know she knows, give her time to register your error, then fix it and laugh.
Kids that are perfectionists tend to believe that they are better off not to try than fail. You need to convince her that everyone messes up sometimes, it's part of life.
