Soft soap or a facecloth (7)
I believe the answer is:
flannel
This clue is a double definition.
'soft soap' is the first definition.
(thesaurus)
'a facecloth' is the second definition.
(I've seen this before)
'or' acts as a link.
(Other definitions for flannel that I've seen before include "Cloth for washing face, or just flattery" , "short trousers" , "Bathroom item" , "something to wash with" , "Woven woollen fabric or flattery" .)