Greater Shepparton City Council is warning the public to avoid direct contact with water in the first lake.
At this stage, Kialla Lakes will not be closed to the public.
Warning signs have been positioned around the first lake and will remain in place while high levels of blue-green algae are present.
Council says people can still enjoy other activities at Kialla Lakes that do not involve direct contact with the affected water.
If contact is made, wash the skin immediately with clean and cold water.
Blue-green algae contain toxins that are harmful to humans and animals.
Signs of algae contact are skin rashes or itchiness, sore eyes, ears and nose, or if swallowed, nausea or vomiting.
Water users from Kialla Lakes are advised to seek an alternative water supply for individuals and their pets.
Do not use affected water for cooking, drinking, washing or showering.
Boiling the water will not make it safe for use in these activities.
Council staff are conducting regular water tests to monitor the situation at Kialla Lakes, but they cannot predict how long the algae will remain at high levels.
To learn more about blue-green algae and the risks it poses, visit http://www.g-mwater.com.au/bluegreenalgae-alert/
For more information about blue-green algae and its impact on health, visit www.betterhealth.vic.gov.au/health/healthyliving/Harmful-algal-blooms or phone NURSE-ON-CALL on 1300 606 024.