Replacing a dominant seventh chord with a diminished seventh chord whose root is a half step higher is referred to as a diminished seventh substitution. For example, a “C” can be substituted by a “C#o7” chord. Keep in mind that there are only three different diminished seventh chords (C#o7, Do7, and D#o7) with each having four possible names and roots (C#o7=Eo7=Go7=A#o7, Do7=Fo7=G#o7=Bo7, and D#o7=F#o7=Ao7=Co7). Another way to look at this type of substitution is that the “VIIo” substitutes for the “V” chord. Two examples of this type of substitution are shown below. (Excerpt from Chord Progressions For Songwriters)

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