Cosy dancing with pal in Caribbean song (7)
I believe the answer is:
calypso
'caribbean song' is the definition.
(I've seen this before)
'cosy dancing with pal' is the wordplay.
'dancing with' is an anagram indicator.
'cosy' anagrammed with 'pal' can make 'CALYPSO'.
'in' is the link.
(Other definitions for calypso that I've seen before include "Odysseus was delayed by her" , "Sea nymph of Greek mythology - Caribbean ballad" , "Keeper of the Ithacan king" , "ad-libbed, topical ballad" , "Topical West Indian song - orchid - sea nymph" .)