Withdrawing coat, one dropped embarrassingly short material (7)
I believe the answer is:
cambric
'material' is the definition.
(cambric is a kind of material)
'withdrawing coat one dropped embarrassingly short' is the wordplay.
'withdrawing' says the letters should be written backwards.
'coat' becomes 'mac' (mac is a kind of coat).
'one dropped embarrassingly' becomes 'brick' (to drop a brick is to make an embarrassing mistake).
'short' means to remove the last letter.
'mac' in reverse letter order is 'cam'.
'brick' with its last letter taken off is 'bric'.
'cam'+'bric'='CAMBRIC'
(Other definitions for cambric that I've seen before include "Thin linen or cotton cloth" , "Fine white linen" , "Lightweight cotton or linen cloth" , "Material" , "Lightweight linen or cotton fabric" .)