Legal, yes. There's no law that says a controller cannot do it. A controller faced with a situation like this where a navaid fails will offer whatever alternatives remain. Whether the pilot will accept the alternative is another matter. As Few Cloudy says, the weather will no doubt play an important factor in the Commander's decision but, ultimately, it's up to the crew on the aircraft and having dealt with a similar situation myself, it didn't surprise me that the aircraft that I had on frequncy wanted a bit of time to sort themselves out before making the approach.
What's interesting about Stifler's question is that both the GP and NDB failed. These are two completely different systems and it's hard to see how both could fail at the same time (without other significant failures). Nonethless, it could happen, but in this case it may take the only fix for the aerodrome out of play which might cause more problems for aircraft crews in terms of JAR-OPS requirements or whatever.