Little bird caught by peasant after severe upset (8)
I believe the answer is:
dabchick
'little bird' is the definition.
(term for a small grebe)
'by peasant after severe upset' is the wordplay.
'by peasant' becomes 'chick' (I can't explain this - if you can you should give a lot more credence to this answer).
'after' is a charade indicator (letters next to each other).
'severe' becomes 'bad' (similar in meaning).
'upset' says the letters should be written backwards.
'bad' reversed gives 'dab'.
'chick' after 'dab' is 'DABCHICK'.
'caught' is the link.
I am not very happy about this link. It may be part of another bit of the clue.
(Other definitions for dabchick that I've seen before include "diving-bird" , "Small grebe" , "good swimmer and diver" , "Water bird - little grebe" , "Waterbird" .)