Gippsland Coastal Board chairman Duncan Malcolm said the red water could be seen in the Cunninghame Arm, Newlands Arm, Duck Arm, Eagle Bay and Paynesville areas.

"This discolouration is caused by a species of dinoflagellate algae called Noctiluca scintillans,'' he said.

"It is a large (up to two millimetres) algae that feeds on other algae, micro-organisms and fish eggs.

"There are no known toxic effects on humans, animals or fish and the ammonia released by the red algae may deter fish from swimming in the affected area.

To report sightings of red algae on the Lakes, phone Department of Sustainability and Environment algal response co-ordinator Daniel Mainville on 5172 2111.