Body found in squat surrounded by refuse (7)
I believe the answer is:
density
'body' is the definition.
(density is a kind of body)
'squat surrounded by refuse' is the wordplay.
'squat' becomes 'sit' (I've seen this in other clues).
'surrounded by' means one lot of letters goes inside another.
'refuse' becomes 'deny' ('deny' can be a synonym of 'refuse').
'sit' placed into 'deny' is 'DENSITY'.
'found in' is the link.
(Other definitions for density that I've seen before include "The compactness of a substance" , "Number of items in a given area" , "can be relative" , "Closeness" , "Compactness - stupidity" .)