My favourite topic! (Young adult and children's books).
Okay, for the little one:
Is she into ''chapter books'' yet? If she is, or if she would love to read something 'with' you, the Cornelia Funke books are wonderful. They can seem long, but the stories are lovely. Also, anything by Roald Dahl if she hasn't run into them yet. Neil Gaiman's The Graveyard Book is absolutely superb, and the audio version is breathtaking (and worth suggesting to your older girl as well). Depending on what she likes, the classic Nancy Drew's and the old stand by of the Black Stallion series might be a hit, or maybe something like Lemony Snickett, always a good time.
The older girl:
Sarah Singleton's ''Poison Garden'' series is great. Plus, very high interest, so it doesn't tax the stamina of a new reader. What sorts of other interests does she have? If she likes animals, Brian Jacques' Redwall series might be nice (bonus, lots and lots of books in that series), if she likes more real-world type stuff, Laurie Halse Anderson's "'Speak'' is one of those once in a lifetime books (although it is about a high school girl who does go through some trauma, she comes out fine, but the trauma is there. It is also hilarious.) Alice Hoffman's ''Color'' series (aquamarie, jade, indigo) are also great, plus short, which can help someone pick up a book. Avi's books could be great for both girls, depending on which ones you pick up. The Sisterhood of the Travelling Pants series is great.
Scott Westfeld is fantastic.
I could do this forever, but if you check out my reviews on Bookgeeks (
http://www.bookgeeks.co.uk/author/jennie/) you'll see more YA ones (mixed in with some adult ones). Plus, if you let me know a little bit more about the girls, I can get even more specific!
(The are always the classic Judy Blumes, plus the ''Diary of a Wimpy Kid'' and ''Bones'' series of graphic novels.) I will stop now, if only to let you roll your eyes at my excess of enthusiasm!