The present invention provides a cost effective biotechnological process for production of bio-fuels from isolated and characterized microalgae. The algal strains used in the present invention having higher biomass, higher lipid productivity, higher pH and temperature tolerance are selected from the group consisting of Chlorella vulgaris iOC-1, Chlorella vulgaris iOC-2, Chlorella kessleri, Botrococcus bruni, Dunaliella salina and Nannochloris oculat or a combination thereof having 95-100% similarity with 18s ribosomal nucleic acids nucleotide sequences (rDNA) given for Seq. ID I, Seq. ID 2, Seq. ID 3, Seq. ID 4, Seq. ID 5 and Seq. ID 6. The present process of bio-fuel production comprises the steps of producing lipid from green algae in bioreactors by various novel steps and extracting oil from dried algal cells and ultimately producing biodiesel by transesterification of the said extracted oil.