Cover up a novel problem (7)
I believe the answer is:
dilemma
'problem' is the definition.
(a dilemma is a problem)
'cover up a novel' is the wordplay.
'cover' becomes 'lid' (lid is a kind of cover).
'up' is a reversal indicator (in down clue: letters go upwards).
'a novel' becomes 'emma' (novel by Jane Austen).
'lid' reversed gives 'dil'.
'dil'+'emma'='DILEMMA'
(Other definitions for dilemma that I've seen before include "Difficulty (with two choices?)" , "23 [SPOT]" , "difficult question" , "The choice between courses of action, all equally undesirable" , "Perplexing situation or difficult choice" .)