Erotic performer, Australian beauty by the way (8)
I believe the answer is:
stripper
'erotic performer' is the definition.
'australian beauty by the way' is the wordplay.
'australian beauty' becomes 'ripper' ('ripper' is Australian slang for a beauty).
'by' means one lot of letters go next to another.
'the way' becomes 'st'.
'ripper' put after 'st' is 'STRIPPER'.
(Other definitions for stripper that I've seen before include "Progressively barer performer" , "Her act is a revelation" , "Teasing performer" , "One barely entertains" , "Paint remover" .)