Beset by donkey, last of Welsh sheep retreats (7)
I believe the answer is:
ashrams
'retreats' is the definition.
(I've seen this before)
'beset by donkey last of welsh sheep' is the wordplay.
'beset by' is an insertion indicator ('beset' could historically mean 'cover').
'donkey' becomes 'ass' (ass is a term for a donkey).
'last of' suggests the final letters.
'sheep' becomes 'ram' (male sheep).
The final letter of 'welsh' is 'h'.
'h'+'ram'='hram'
'ass' placed around 'hram' is 'ASHRAMS'.
(Other definitions for ashrams that I've seen before include "Retreats" , "Hindu places of religious retreat" .)