Challenge your child to steer around small rocks, or to stop before hitting a chalk line. It's a great idea to get together with neighborhood parents and kids for a morning of fun riding at a local playground. Kids tend to learn best when simply following the example of others their size.
Lay a 10-foot 2x6 or 2x8 flat on a grassy surface. Have your child practice pulling up on the handlebar and giving the pedals a quick stab as he leans back slightly and lofts the front tire onto the board. (The piece of wood isn't thick enough to cause any problems if your child misjudges the lift.) Then, have him slowly ride the length of the board--the goal is to stay on top of the board for its entire length and then ride off the other end. As this gets easier, swap to a narrower piece of wood, or add another board at the end to double the distance.
Tight cornering requires that you lean the bike over a bit. To help your child practice, have her weave through a line of four or five safety cones or similar objects, each spaced about 8 feet apart. As her skill improves, encourage her to go faster, or move the cones out of a straight line so that they are staggered, and she has to turn more to get around each cone.
Find a grassy slope in a park to practice going faster and braking without skidding. Of course, a few skids can add to the fun--and improve kids' bike-handling skills.