Hound is circling round stretch of Irish water (7)
I believe the answer is:
sloughi
'hound is circling' is the definition.
I know nothing about this answer so I cannot judge whether this works.
'round stretch of irish water' is the wordplay.
'round' is an insertion indicator.
'stretch of' becomes 'si' (I can't justify this - if you can you should give a lot more credence to this answer).
'irish water' becomes 'lough' (Irish term for a loch or lake).
'si' enclosing 'lough' is 'SLOUGHI'.
Can you help me to learn more?
(Another definition for sloughi that I've seen is " Dog".)