Reduce short skirt seen in vessel (8)
I believe the answer is:
diminish
'reduce' is the definition.
(thesaurus)
'skirt seen in vessel' is the wordplay.
'skirt' becomes 'mini' (a mini skirt).
'seen in' is an insertion indicator.
'vessel' becomes 'dish'.
'mini' inserted within 'dish' is 'DIMINISH'.
'short' acts as a link.
(Other definitions for diminish that I've seen before include "cut down" , "Make less with mini dish" , "Decrease, lessen" , "Peter out" , "Make or become smaller" .)