How to Practice Sight Reading Piano Music

Assuming that you already have basic knowledge of playing the piano, and are learning how to sight read the music sheet a few hints on how to learn to read might help. Just like in typing, playing the piano requires that you do not look down at your hands, and that reading the notes, becomes as second nature, as reading words in a book!

Find a book of music, other than the ones you are using, at around your skill level, or a little easier. This should be music that you think you would like, but have never heard before. You should find, to start with about 5 pieces.
Sit at the piano, and open the book to the first page. Try to look at the notes,say the notes softly, and understand the piece a little bit without actually playing any part of it. Now, start playing, very slowly, saying the key names in your head as you play and looking at them to see what they look like. It is very important to not stop and restart when you make a mistake. Just keep playing. Look for patterns while you are playing, and always try to read a minimum of one measure ahead.
When you finish one piece, repeat it until you feel comfortable knowing the name of the notes. Remember, its is once again like typing, your mind will tell your fingers where to go, once you practice it often enough.
Continue with the same piece, and when the notes are easy to play, learn the timing of the piece. No piece can sound decent if the timing is incorrect.
Keep practicing in this manner as often as you can. Feel free to go back and study the pieces you played in more depth. The more you practice, the better your sight reading skills will become.

You can, if you do not have a piano nearby, read the music notes, without even playing. Look at their position, and remember what they look like. Get it to memory.
A very good skill when sight reading is recovering from mistakes. You will make them. Don't let them fluster you, just keep playing. It is almost guaranteed that if the listener isn't familiar with the music, and you don't give it away, they'll never know.
One of the hardest parts of sight reading music is getting the rhythm correct. It helps to count out loud, "One and two and three and four and..." Of course the numbers that you count depends on the piece.
It helps to accompany a singer or other instrument while sight reading. This forces you to stay honest.