What do you have to do?

I believe the requirements can all be found here:

http://www.abrsm.org/?page=exams/gradedMusicExams/latestSyllabuses.html

Your teacher should be able to put more substance on the ABRSM descriptions. In essence, you need to be able to play fluently the range of notes indicated by the scales, play a range of dynamics, articulate and play in the appropriate style and tempo for the pieces you choose. In other words, even at grades 1 and 2 simply playing the right notes isn't enough - the performance has to be musical. You should choose pieces that you like.

For many candidates the aural is left to the last minute - this can make it unnecessarily stressful because it can take practice. I like students to start with the scales. Apart from demonstrating that they can play the notes this also leaves plenty of time to practice them to ensure that they are even and fluent. You also need to do plenty of sight reading if you are going to play confidently.