A reddish microbe found on the inside of a tree at a secret location in the rain forests of northern Patagonia could unlock the biofuel of the future, say scientists.

Its potential is so startling that the discoverers have coined the term "myco-diesel" — a derivation of the word for fungus — to describe the bouquet of hydrocarbons that it breathes.

"This is the only organism that has ever been shown to produce such an important combination of fuel substances," said Gary Strobel, a professor of biology at Montana State University.

"The fungus can even make these diesel compounds from cellulose, which would make it a better source of biofuel that anything we use at the moment."

The study appeared in a peer-reviewed British journal, Microbiology.

Strobel, a 70-year-old veteran of the world’s rainforests, said that he came across Gliocladium roseum thanks to "two cases of serendipity".

The first was in the late 1990s, when his team, working in Honduras, came across a previously unidentified fungus called Muscodor albus. By sheer accident, they found that M albus releases a powerful volatile — meaning gassy — antibiotic. Intrigued by this, the team tested M Albus on the ulmo tree, whose fibres are a known habitat for fungi, in the hope that this would show up a new fungus. "Quite unexpectedly, G roseum grew in the presence of these gases when almost all other fungi were killed. It was also making volatile antibiotics," said Strobel.

"Then, when we examined the gas composition of G roseum, we were totally surprised to learn that it was making a plethora of hydrocarbons and hydrocarbon derivatives. The results were totally unexpected and very exciting, and almost every hair on my arms stood on end."

Strobel’s team put the G roseum through its paces in the lab, growing it on an oatmeal-based jelly and on cellulose.

Extractor fans drew off the gases exuded by the fungus, and analysis showed that many of them were hydrocarbons, including at least eight compounds that are the most abundant ingredients in diesel. Biofuels have been promoted as good alternatives to oil, which is sourced from politically volatile regions and is a major contributor to the greenhouse effect.