Till now biodiesel is not suitable for all diesel engines. But regarding to an article on the NewScientist, a group of bioscientists from the university of Exeter around Dr. John Love have managed to alter the DNA of E. coli bacteria to make diesel fuel from glucose from plants that is almost identical to conventional diesel fuel.
The next step is to learn how to scale-up the laboratory experiment to mass produce this biologically produced diesel fuel.
A further interesting aspect of this is that for mass production, the DNA of the bacteria can be further tweaked so you can feed them with straw or animal manure to produce diesel fuel, according to Dr. Love.
You can also read the article from the university of Exeter.