Investigation and coordination of research on various aspects of the reading process were the first purposes of Project Literacy. These programs in their various stages of development have been reported in nine issues of the Project Literacy Reports which are now available from ERIC. The development of a first-grade reading program was started simultaneously with the research programs because it was felt that classroom problems could be further explored through research and vice versa. Since the intent of the program was to search for ideas and to exchange insights of the laboratory and classroom, the small sample used was worked with very intensively. It was composed of three heterogeneously grouped grade-1 classes of about 23 children each, from a suburban and rural school, the latter group being preselected. The first-grade program described centers around a curriculum stressing prereading, codes, and skills. The over-all program is composed of reading, sound-spelling correspondence, handwriting, and a literate environment which are fully discussed. The report contains a section on the observer in the classroom and an analysis of reading errors and strategies of information use, stressing qualitative changes in children's reading errors. Appendixes, tables, and references are included. (CL)