Letter from Greece in local newspaper (3)
I believe the answer is:
phi
'letter from greece' is the definition.
(letter from the Greek alphabet)
'local newspaper' is the wordplay.
'local' becomes 'ph' (abbreviation for Public House).
'newspaper' becomes 'i' (UK newspaper).
'ph'+'i'='PHI'
'in' is the link.
(Other definitions for phi that I've seen before include "Greek letter, equivalent to F" , "Greek letter in previous answer" , "exotic character" , "Greek letter; hip (anag.)" , "Letter from the Balkans" .)