Catalyzes the conversion of 7,8-dihydroneopterin to 6-hydroxymethyl-7,8-dihydropterin, 7,8-dihydromonapterin and 7,8-dihydroxanthopterin, respectively, in equal quantities. After longer incubation times the only product is 6-hydroxymethyl-7,8-dihydropterin. 7,8-dihydroneopterin = 6-hydroxymethyl-7,8-dihydropterin + glycolaldehyde 7,8-dihydroneopterin = 7,8-dihydromonapterin 7,8-dihydroneopterin + O2 = 7,8-dihydroxanthopterin + formate + glycolaldehyde + H(+) Cofactor biosynthesis; tetrahydrofolate biosynthesis; 2-amino-4-hydroxy-6-hydroxymethyl-7,8-dihydropteridine diphosphate from 7,8-dihydroneopterin triphosphate: step 3/4. Belongs to the DHNA family.