The most common and most likely answer to this crossword clue is the 8 letter word INCHWORM
I've seen this crossword clue in Independent
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Buddy explains!
The straight part
We know that "Caterpillar" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case caterpillar = inchworm.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does INCHWORM mean?
INCHWORM noun- The larva of a moth of the family Geometridae.
- To move in a looping fashion, like an inchworm.
- To crawl or creep slowly.