VH-DBB was one of four aircraft conducting circuit training on runway 26L. The pilot was advised by air traffic control that her aircraft was number three in sequence and to follow an aircraft on mid-downwind, but she mistook a landing aircraft as the aircraft to follow and turned base in front of the number two aircraft. The air traffic controller noticed the conflict and alerted the aircraft so that avoiding action could be taken. The aircraft passed within 200 feet laterally of each other. The owner-pilot of VH-DBB had been conducting refresher training and was familiar with the aircraft and Parafield, and therefore conducting reasonably tight circuits. The other aircraft were being flown by ab initio students under dual instruction, and carrying out wider than normal circuits. This led the pilot of VH-DBB to mistake the aircraft on final as the number two aircraft, which she had lost sight of in the ground clutter, and made her turn onto final approach to follow that aircraft. The correct aircraft was on a long final approach at the time. Both of these aircraft were of the same type and similar colour.