Basket holding women's yarn (6)
I believe the answer is:
crewel
'yarn' is the definition.
(I've seen this before)
'basket holding women's' is the wordplay.
'basket' becomes 'creel' (creel is a kind of basket).
'holding' indicates putting letters inside.
'women' becomes 'w'.
'creel' going around 'w' is 'CREWEL'.
(Other definitions for crewel that I've seen before include "Fine worsted yarn" , "Twisted yarn for tapestry or embroidery" .)