Government division accommodates English Queen (8)
I believe the answer is:
steerage
'government' is the definition.
(I've seen this before)
'division accommodates english queen' is the wordplay.
'division' becomes 'stage' (I've seen this before).
'accommodates' means one lot of letters goes inside another.
'english' becomes 'E' (abbreviation).
'queen' becomes 'ER' (abbreviation for Elizabeth Regina).
'e'+'er'='eer'
'stage' placed around 'eer' is 'STEERAGE'.
(Other definitions for steerage that I've seen before include "Formerly cheapest space on board" , "Cheap accommodation on a passenger ship" , "Cheap part of ship" , "main accommodation" , "Cheapest classes" .)