Terrible chaos with elves in narrow escape (5,5)
I believe the answer is:
close shave
'narrow escape' is the definition.
(I've seen this before)
'terrible chaos with elves' is the wordplay.
'terrible' indicates anagramming the letters.
'with' is a charade indicator (letters next to each other).
'chaos' put after 'elves' is 'elveschaos'.
'elveschaos' anagrammed gives 'CLOSE SHAVE'.
'in' acts as a link.
(Other definitions for close shave that I've seen before include "Near thing" , "Narrow escape from disaster" , "nasty moment" , "Almost a disaster" , "resulting in barefaced cheek?" .)