The student glider pilot had carried out three previous flights during the day. Her instructor had informed her that she was at a suitable stage of training to be introduced to practice emergency procedures. After sighting her training log book, the instructor for the final flight left the glider to speak to the pilot of the tug aircraft. The instructor returned to the glider and preparations for take-off were then continued. Witnesses observed that the tug and glider became airborne and subsequently carried out normal turns to position the aircraft on a downwind leg at about 500 feet above ground level. The tug aircraft was then seen to waggle its wings sharply three times. Almost immediately this aircraft assumed a steep nose-down attitude, its tail apparently being pulled into a vertical position by the tow rope which was still attached to the glider. The glider then also assumed a steep nose-down attitude and both aircraft spun or spiralled towards the ground. The tow rope was released from both aircraft, but neither pilot regained control before impact with the ground. The subsequent investigation did not disclose any defect or malfunction with either aircraft that might have contributed to the development of the accident. During glider towing operations when the pilot of the tug waggles the aircraft wings it is a signal to the glider to immediately release from the tow. This "wave-off" signal would normally be given when the tug pilot detects some malfunction or when the glider is sufficiently far out of position behind the tug to affect the tug pilot's control of his aircraft. On this occasion it was considered possible that the instructor in the glider had arranged for the tug pilot to simulate an emergency by giving a wave-off signal. The wave-off signal was observed to be given in the normal position relative to the strip for such training manoeuvres to be performed. The reason for the subsequent loss of control of both aircraft could not be determined, however it was evident that when the aircraft released the tow rope there was insufficient height remaining to permit recovery to normal flight.