Seat on your hip and pair your feet with no space with no space between edges of your feet.
Seat on your hip and connect your feet with no space between edges of your feet.
Like this picture. http://www.flickr.com/photos/1zonie/4464732309/
This pose is frequently described as "hugging your knees to your chest."
For starters, you repeat (almost) your whole sentence twice, and the first time around you repeat with no space. That seems confusing.
Then, as far as the positioning of the feet is concerned, that is pretty clear. Both pair and connect are conveying the right meaning, although you could also simply use place.
The simplest option would be
Place your feet together so there is no space between them.
Now, for the confusing part: I was really wondering what you meant with sit on your hip.
After looking at the picture, I can assure you that the part of her body that she is sitting on is not her hip.
There are many words for that part, but among the politer ones are behind or buttocks.
However, you do not need to name that, as she is sitting on what anyone would sit at if no further directions are given.
So this would describe the whole pose:
Sit down with your feet together (so there is no space between them).
I'd like to suggest,
(She is) sitting, hugging (her) knees.
With a small risk of being a little ambiguous (some might cross their legs, which in that case you might need to add "feet together"), I'd say that it is clear and concise enough.