Vagrant putting newspaper in towel? (7)
I believe the answer is:
drifter
'vagrant' is the definition.
(synonyms)
'newspaper in towel?' is the wordplay.
'newspaper' becomes 'ft' (Financial Times newspaper).
'in' is an insertion indicator.
'towel?' becomes 'drier' (something which dries).
'ft' inserted into 'drier' is 'DRIFTER'.
'putting' acts as a link.
(Other definitions for drifter that I've seen before include "Itinerant person" , "Wanderer; fishing vessel" , "Gadabout" , "kind of boat" , "one unsettled" .)