In recent years, diffusion has gained increasing recognition as an important process for explaining the lithium (Li) isotope ratios (delta Li-7) of magmatic systems. However, the role of diffusion in explaining the variability of mantle-derived basalts has not yet been investigated in detail. We have measured delta Li-7 values in a comprehensive suite of fresh, subglacial Icelandic basalt glasses and observe a wide range of values from 2.4 parts per thousand to 7.3 parts per thousand, the largest range in Li isotope compositions identified at any ocean island. We find that delta Li-7 values do not correlate with lithophile element tracers, but do correlate with He-3/He-4. One possibility is that the high diffusivities of both Li and He permit fractionation of Li isotope compositions that couple it to He-3/He-4, and decouple it from other, slower-diffusing lithophile tracers. In this study, we explore this idea and model diffusive processes in crystal mushes and mantle melt channels, both with and without melt transport. Our modelling indicates that large (>3 parts per thousand) fractionation of Li isotope compositions from MORB-like values can be generated by diffusion and that the coupling of Li isotope ratios and He-3/He-4 signatures can occur as a consequence of diffusive interactions within mantle melt channels. This suggests that the Li isotope compositions of melts cannot be used as a straightforward passive tracer of mantle heterogeneity, because they can be fractionated during magmatic processes. In contrast, we find that diffusive fractionation of He-3/He-4 is small (similar to 1 Ra) next to the variability in Icelandic basalts (similar to 8 to similar to 35 Ra). Diffusive fractionation of Li isotope ratios should be most pronounced at OIB localities whose mantle melts have a wide range of [Li], such as Hawaii and Iceland. Although a mantle source can contain Li isotope heterogeneities as a result of crustal recycling, we show that a mantle that is homogenous in Li isotope composition can still generate melts that have variable delta Li-7 values via diffusion processes. The same diffusion models can also be applied to other stable isotope systems such as H, Mg, Ca, and Fe. Indeed our models show that diffusion during magmatic transport within the mantle may be a significant source of "noise" in the delta Li-7, delta D, and possibly delta Mg-26 isotopic systems.