If you can get your hands on it, I very much like Clinton Anderson's way of teaching, because he explains things so well. You know exactly when/where/why he is doing something.
Here's an example video I found on YouTube
An above poster is right: You need to also be able to control the horse's shoulders (along with the hindquarters) before you can start teaching them to lunge.
Make sure you are wearing gloves when lunging. Prevents rope burns!
It is easiest to have a long lunge whip. You won't necessarily need to whip the horse, but you do need an extension of your arm to keep you in a safe zone away from the horse.
Lunging is all about body position. Make sure your body is behind the horse's shoulder. Watch Clinton in the video I posted and watch his body position. If you step in front of the horse's shoulder, that's the horse's cue to STOP.
Let's say you want the horse to travel counter clockwise. You would hold the lead rope in your left hand, and hold your left hand out in the air in the direction you want the horse to go (again, watch Clinton's video and see where his leading hand is). And you'd hold the whip in your right hand.
Start by keeping the line short so you have better control of your horse's body. Also, make sure you start at the walk.
Lunging is not meant to "tire" or simply "work" the horse. Lunging is meant to teach respect to the horse and make him pay attention to you and your body language.
As someone else recommended, lunging is very difficult to explain over the computer. It is much better to have someone who you in person.
Especially if you have never trained a young one from scratch before, it can never hurt to have a few lessons with a trainer to make sure you are doing things correctly.
Heck, I've been riding for 24 years and I just took some English riding lessons yesterday. You are never beyond the point of learning.