Temporary but popular condition of contract covering island (7)
I believe the answer is:
interim
'temporary' is the definition.
('interim' can be similar in meaning to 'temporary')
'popular condition of contract covering island' is the wordplay.
'popular' becomes 'in'.
'condition of contract' becomes 'term' (I've seen this before).
'covering' means one lot of letters goes inside another.
'island' becomes 'i'.
'term' going around 'i' is 'terim'.
'in'+'terim'='INTERIM'
'but' is the link.
(Other definitions for interim that I've seen before include "Temporary - provisional" , "not there for ever" , ", I'm put in grave situation initially" , "Caretaker" , "Meanwhile" .)