The most common and most likely answer to this crossword clue is the 5 plus 3 letter word LOONY BIN
I've seen this crossword clue in The Guardian
L
O
O
N
Y
B
I
N
More clues leading to the result LOONY BIN
Buddy explains!
The straight part
We know that "bedlam/bedlam" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case bedlam/bedlam = loony bin.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.