If you want to eliminate fuel waste you need to go to a modern EFI engine. Mileage on these things was unheard of just a few years ago. But you must bring all the systems with them to do this which can be complcated and expensive. But modern performance in power, mileage and low emissions is nothing short of stunning. This upgrade would also need to include a matching modern transmission as the combination of lower low gears at one end and high overdrive ratio's at the other a powerful partners to these new engines.
Chevy LS engines are great, as small as 4.8 liters. Go to LS1Tech.com forum, they have a chapter on conversions, a lot of info to be found there.
Small displacement is the key here, as long as it has sufficient torque to move the vehicle efficiently. In other words, you don't want to have to run the engine at heavy throttle settings under normal conditions.