A quick and accurate way for testing collimation of laser beams is desired to achieve correct results in many optical instruments. Laser beam collimation is generally performed using glass wedge plates. For better accuracy, a set of wedge plates of different thicknesses and wedge angles are required to acquire first-hand visual information about collimation of laser beams having a wide range of diameters. Use of a compact holographic lateral shearing interferometer (HLSI) is demonstrated for collimation testing of laser beams having different beam diameters. The interferometer uses two holographic optical elements (HOEs) with provision of variable tilt in one of the HOEs to maintain a constant number of fringes in the interferograms for different diameters of input test beams. An angle of rotation of interference fringes from a reference position is measured to be 0.9 deg for a test beam of diameter 2 mm and 16 deg for the test beam of diameter 35 mm. We experimentally demonstrated range of optimum number of interference fringes in the interferogram for visual inspection of the collimation state of the test beam. Thus the proposed interferometer could replace a set of wedge plates generally required for collimation testing of beams having different diameters. The functioning of the interferometer for collimation testing of beams having different diameters is discussed and experimentally demonstrated.