The scientists say that in tests, the fungi performed as well as the best engineered attempts from industry.
The study has been published in the journal, Science.
Fuel from foodEnvironmentalists have long criticised the current generation of biofuels that are produced from crops, such as maize, as they believe that using land for fuel instead of food drives up prices and impacts the poor.
Researchers have had some success making usable fuel from food and animal waste. But, so far, the ability to efficiently use the vast majority of cheap, waste organic material has eluded them.
The problem with turning wood chips and grasses into fuel is the matrix of complex molecules found in the cell walls of these tough materials.
Industrial attempts to break these down into the type of sugars that can be refined for fuel often require preheating or treatment with chemicals, which add to the complexity and the cost.read more =http://www.bbc.co.uk/news/science-environment-35612554