Cancellation includes room (4)
I believe the answer is:
cell
'room' is the definition.
(cell is a kind of room)
'cancellation includes' is the wordplay.
'includes' indicates the answer is hidden within the clue.
'CELL' is hidden within 'cancellation'.
(Other definitions for cell that I've seen before include "Dungeon" , "American mobile" , "may be wet or dry?" , "Spreadsheet unit" , "Where a prisoner is kept" .)