Singleton withdrew all seven of his horses under Waterhouse's supervision on Sunday, a day after a televised spat between the pair at Sydney's Royal Randwick where the 71-year-old businessman's runner More Joyous disappointed with a second-to-last finish in the Group One All Aged Stakes.
Singleton, a long-time racing stalwart Down Under, accused Waterhouse of telling her bookmaker son Tom that More Joyous was not fit for the 1400-metre race and that Tom had told people the six-year-old mare could not win it.
Singleton said he felt More Joyous, which finished four lengths behind behind race favourite All Too Hard, should not have run and attacked the relationship between his trainer and her bookie son.
Tom Waterhouse denied the allegations and threatened Singleton with legal action. He also told local media he had lost A$85,000 ($87,400) on the race and that if More Joyous had won, he would have won more than A$300,000.
Racing New South Wales, the industry's governing body in the eastern Australian state, have launched an inquiry into the allegations.
Waterhouse fronted stewards after the race and disclosed that the horse had been treated with an antibiotic for a possible infection in the leadup, local media reported.
"There is a rule that requires a trainer to report a condition, not that will affect, but may affect a horse in a race," Racing NSW chief steward Ray Murrihy said in comments published by The Australian newspaper's website (www.theaustralian.com.au) on Monday.
Racing officials will hold a hearing on Friday.
Nick Xenophon, an independent senator, has called for the government to get involved and examine the horse racing industry in greater depth.
"I think the allegations made here are so serious ... you need something to clear the air," he told Australia's Seven Network. "The best and fairest way to deal with this is an inquiry with judicial powers."
The spat has brought more unwanted attention on Australia's beleaguered horse racing industry, which was rocked by a wide-reaching police probe late last year into race-fixing in the southern state of Victoria that swept up prominent jockeys and cast doubts over the sport's integrity.