Here's a little trick I use for making diminished chords on the fly, as it relates to fingerpicking and keeping an alternating bass going.

A word of caution though. It involves the thumb!!!!!

I start with an alternate way to play a 7th chord.
For example, let's say I wanted to play a G7 (assuming the guitar is in standard tuning E-A-D-G-B-E.) My fingering for the G7 chord would be:

- index finger on the 4th string, 3rd fret
- middle finger on the 2nd string, 3rd fret
- ring finger or the 3rd string, 4th fret
...and the thumb frets the 6th string, at the 3rd fret...
So, you pick the thumb note first, and pluck only the other strings that you're fretting. (Ignore or mute the others.)

To go to the G# diminished, leave all your fingers where they are and simply move the thumb up to the 4th fret (6th string.)

Yeah, it's a bit of a stretch, but if those of you can make the infamous thumbed F chord, than this shouldn't be a major problem.

The above, is also a universal (alternate) position for 7th chords and diminshed chords up and down the neck. I use it a lot, and it sounds purdy good.