Pond-dweller bit European (7)
I believe the answer is:
tadpole
'pond-dweller' is the definition.
(a tadpole might live in a pond)
'bit european' is the wordplay.
'bit' becomes 'tad' (both can mean a small amount).
'european' becomes 'pole' (Pole is an example).
'tad'+'pole'='TADPOLE'
(Other definitions for tadpole that I've seen before include "Young amphibian" , "being hatched in a puddle?" , "youngster" , "Young frog" , "Immature amphibian" .)