Gnome used to be the wrong way round (3)
I believe the answer is:
saw
'gnome' is the definition.
(both can mean a proverb or saying)
'used to be the wrong way round' is the wordplay.
'used to be' becomes 'was' (eg 'he was...' means 'he used to be...').
'the wrong way round' is a reversal indicator.
'was' back-to-front is 'SAW'.
(Other definitions for saw that I've seen before include "Cutting tool - did 23" , "Carpenter's tool" , "Witnessed" , "See 23" , "Toothed blade" .)