I'm not an expert on diesel cars but I am a Truck fitter, on diesels white smoke is rarely a water problem, more usually an unburned fuel issue, in old mechanical injection engines could often be caused by 'slipped timing' but as we're talking about an electronically controlled system here, it's more likely to be an injection / fueling problem. Unburned fuel is emitted through the exhaust and leaves a very pungent smell that can make your eyes water, has the poor consumption been accompanied by a loss in performance, or is it still pulling well??
Ross.