Shanty town in best-loved American city (6)
I believe the answer is:
favela
'shanty town' is the definition.
(I've seen this before)
'best-loved american city' is the wordplay.
'best-loved' becomes 'fave' (I've seen this before).
'american city' becomes 'LA' (short for Los Angeles).
'fave'+'la'='FAVELA'
'in' is the link.
(Other definitions for favela that I've seen before include "Shantytown in Brazil" , "Ramshackle town" , "Shanty town, especially in Brazil" , "(Brazilian) shack, shanty town; Alf, Eva (anag.)" , "Brazilian slum" .)