The student conducted a normal take off and was climbing in a right turn at 50 knots and 200 feet above the ground when the engine rpm suddenly reduced by about 60 percent. The instructor immediately took over the controls lowered the nose adopted a glide attitude and began a left turn into wind by which time the airspeed had reduced to 40 knots. He then became concerned about a powerline in the area which he could not see. In an attempt to avoid this powerline he turned the aircraft to the right which was downwind but towards a suitable forced landing area. During the turn the airspeed reduced to about 35 knots and the rate of descent increased. At about 10 feet above the ground and with a tail wind of about 10 knots the aircraft was flared in an unsuccessful attempt to arrest the rate of descent. The aircraft struck the ground heavily bounced and then overturned. A subsequent examination of the engine revealed a damaged low tension ignition lead. This had the potential to short-out on the housing of the engine fuel pump thereby causing one of the spark plugs to become inoperative with an associated reduction in engine rpm. The damaged wire was probably the result of an earlier heavy landing.