Lack of honesty old city avoided? Impossible (2,3,2)
I believe the answer is:
no can do
'impossible' is the definition.
('no can do' can mean something is impossible)
'lack of honesty old city avoided?' is the wordplay.
'lack of' becomes 'no' (lack of money is no money).
'honesty' becomes 'candour' (candour is a kind of honesty).
'old city' becomes 'ur' (ancient city state).
'avoided?' is a deletion indicator.
'candour' with 'ur' taken away is 'cando'.
'no'+'cando'='NO CAN DO'
(Other definitions for no can do that I've seen before include "Absolutely not!" , "Bring-a-bottle party?" , "Impossible, I'm afraid!" , "Informal expression of refusal" , "That's not possible" .)