Peerless but unable to light a fag! (9)
I believe the answer is:
matchless
'peerless' is the definition.
(synonyms)
'light a fag' is the wordplay.
'light' becomes 'match' (match is a kind of light).
'a fag' becomes 'less' (I am not sure about this - if you are sure you should give a lot more credence to this answer).
'match'+'less'='MATCHLESS'
'but unable to' is the link.
This may not be correct. Some or all of it may belong to another bit of the clue.
Can you help me to learn more?
(Other definitions for matchless that I've seen before include "Like the top" , "Unbeatable" , "team without a fixture" , "Incomparable" , "Having no equal" .)