In the present study, Reynolds-Averaged Navier-Stokes simulations together with a novel flamelet generated manifold (FGM) hybrid combustion model incorporating preferential diffusion effects is utilised for the investigation of a hydrogen-blended diesel-hydrogen dual-fuel engine combustion process with high hydrogen energy share. The FGM hybrid combustion model was developed by coupling laminar flamelet databases obtained from diffusion flamelets and premixed flamelets. The model employed three control variables, namely, mixture fraction, reaction progress variable and enthalpy. The preferential diffusion effects were included in the laminar flamelet calculations and in the diffusion terms in the transport equations of the control variables. The resulting model is then validated against an experimental diesel-hydrogen dual-fuel combustion engine. The results show that the FGM hybrid combustion model incorporating preferential diffusion effects in the flame chemistry and transport equations yields better predictions with good accuracy for the in-cylinder characteristics. The inclusion of preferential diffusion effects in the flame chemistry and transport equations was found to predict well several characteristics of the diesel-hydrogen dual-fuel combustion process: 1) ignition delay, 2) start and end of combustion, 3) faster flame propagation and quicker burning rate of hydrogen, 4) high temperature combustion due to highly reactive nature of hydrogen radicals, 5) peak values of the heat release rate due to high temperature combustion of the partially premixed pilot fuel spray with entrained hydrogen/air and then background hydrogen-air premixed mixture. The comparison between diesel-hydrogen dual-fuel combustion and diesel only combustion shows early start of combustion, longer ignition delay time, higher flame temperature and NOx emissions for dual-fuel combustion compared to diesel only combustion.