City of eastern New Zealand in flames (7)
I believe the answer is:
firenze
'city' is the definition.
(Firenze is an example)
'eastern new zealand in flames' is the wordplay.
'eastern' becomes 'e'.
'new zealand' becomes 'nz' (abbreviation).
'in' means one lot of letters goes inside another.
'flames' becomes 'fire' (I've seen this in another clue).
'e'+'nz'='enz'
'enz' put within 'fire' is 'FIRENZE'.
'of' acts as a link.
(Other definitions for firenze that I've seen before include "Florence, for Italians" , "Italian name for Florence" , "Italian form of Florence" .)