Terry initially swirls around in underwear (7)
I believe the answer is:
teddies
'underwear' is the definition.
(women's all-in-one undergarment)
'terry initially swirls around' is the wordplay.
'initially' suggests taking the first letters.
'swirls around' becomes 'eddies' (to eddy is to swirl around).
The first letter of 'terry' is 't'.
't'+'eddies'='TEDDIES'
'in' acts as a link.
(Other definitions for teddies that I've seen before include "Undergarments and children's toys" , "Soft toy bears" , "Children's toy bears" .)