Ambassador seen in group in paper (5)
I believe the answer is:
sheet
'paper' is the definition.
(sheet is a kind of paper)
'ambassador seen in group' is the wordplay.
'ambassador' becomes 'he' (His or Her Excellency).
'seen in' indicates putting letters inside.
'group' becomes 'set' (set is a kind of group).
'he' put inside 'set' is 'SHEET'.
'in' acts as a link.
(Other definitions for sheet that I've seen before include "Item of bedlinen" , "Piece of writing paper" , "Piece of paper, linen, or water" , "film" , "* [MATERIAL]" .)