Many Waters by Madeline L’Engle takes some characters from her Wrinkle in Time series and places them in immediately pre-flood Genesis. It’s a wonderful book, but I’m not sure if it’s “literature” in the Miltonian sense of the word.
Jose Saramago’s wonderful The Gospel According to Jesus Christ. Saramago is a Nobel laureate, so it definitely counts as “real literature”.
Ditto for JB, which has also been mentioned. I read it in high school a mere ten years ago, and I do remember it pretty well: God and the Devil - who are both portrayed as circus performers - decide to see whether a good man whose life has been ruined will retain his faith. It’s a very cynical look at religion.
Another vote for “The Red Tent” by Anita Diamant. I didn’t expect to like it at all, but it really drew me in and made me care about the characters. Quite good, very evocative of the desert and nomadic life, and adeptly expands upon what little we know about the Biblical Dinah.
In capital-L Literature, damn near everything written in the last couple thousand years has references to the bible. Christ figures alone are rife in literature; you can’t go through a high school or university Literature course’s reading list without tripping over at least a half-dozen.
There have also been quite a few popular fiction books written that are based on the bible. Three from Galilee tells of Jesus’ life as a young man. Two from Galilee tells about when he was a child. I remember reading these when I was about 10 or so.
Prophets are common choices for adventure/love story fiction. I remember one book about Elijah and his love affair with Jezebel. Pretty racy, halfway decent read. Be damned if I can find it now though; I’ve spent the last 20 minutes searching. Wish I could remember the author. King David provided lots of material for people who wanted to write “historical” fiction based on his adventures.
Stephen Lawhead has done some fantasy and SF stuff that is more than casually based on biblical stories. I’ve never been able to get into his fantasy stuff, but his Empyrion books were memorably good reading when I was in high school.
I just have to point out thyat (although there’s more than just this in there), the Revolt of the Fallen Angels and the Fall of Lucifer isn’t actually in the Bible. There are a handfuil of scattered verses that are said to refer to the event, but which (if you hasd never heard the story) don’t obviously suggest it. I strongly suspect that they refer to different things entirely. The whole story of Lucifer’s revolt is extrabiblical Christian mythology.
Moses: Man of the Mountain by Zora Neale Hurston is a retelling of Moses freeing the Israelites, but within the context of the black slaves being freed from the south post-civil war. (It’s less academic and more readable than I’m making it sound here.)