The research literature is pretty clear that phonics works best for teaching reading to normal children. There's little or no good data on how to teach reading to autistic children.
Temple Grandin favors a phonics approach. This article, unfortunately pdf only, favors a whole word approach. Your mileage will vary:
Teaching Students With Autistic Spectrum Disorders to Read: A Visual Approach Leslie Todd Broun. Council for Exceptional Children. Vol 36n4 2002.