Mutant strains of Zymomonas mobilis (BL4) bacterium wera developed for tolerance to low pH high temperature, salt and alcohol concentrations using the chemical mutagen n methyl, n-nitro, n-nitrosoguanadine (NTG). The mutants were tested for their efficiency to produce ethanol from various carbon sources, glucose, sucrose and molasses. The strains AB1, AB5, AB9 and AB10 produce high amount of ethanol in glucose medium and strains AB2, AB5, AB8, AB9 and AB10 in molasses medium. This increased production was attributed to tolerance of these strains to low pH and high levan production by these strains. Immobilised bioreactor was found to be more efficient for alcohol Production than batch fermentor.