Snapping hip also known as Coxa Saltans (Dancing Hip)
Most commonly occurs in dancers and athletes, it can be due to structures within the hip joint such as psoas tendon catching over the femoral head, labral tears can sometimes give rise to the significant click and the other cause which is the most common is where the iliotibial band (ITB) becomes thickened and catches over the back of the trochanter, this give a feeling of the hip giving way or "dislocating".
Treatment is usually conservative Will use of anti-inflammatory medication stretching exercises and physical therapy. Steroid injections can help unusual series all three is required. Surgery is rarely use and only in resistant cases and can be achieved with keyhole surgery obtaining a good outcome in my practice.
More information: http://orthoinfo.aaos.org/topic.cfm?topic=A00363