The games are due to begin in only five weeks.
The forest of blue-green algae is choking coastal waters around the city, surrounding beaches and lying in thick layers along Olympic sailing routes.
China's official Xinhua news agency reported that the infestation includes 32 per cent of the coastal sea area set aside for Olympic events from August 9 to 21.
Wang Shulian, vice director of Qingdao's ocean and fishing bureau, told reporters on Sunday that the algae outbreak has no "substantial link" to environmental conditions or water quality.
|Teams of fishing boats have been deployed to help clear the algae [EPA]
"The algae is of various sorts, which will prosper under satisfying temperature and salinity of sea water,'' he was quoted as saying.
But similar algae outbreaks in China during recent years, mostly on inland lakes, have been blamed on high levels of pollution from industrial sources, farm chemicals and domestic sewage.
Blue-green algae "blooms" occur when nutrients, sometimes caused by excessive pollution, build up in water.
Such rapid growth can take over entire lakes and choke coastlines.
Officials say the Qingdao outbreak poses no health threat.
In northern China meanwhile, authorities are reported to have despatched some 33,000 exterminators and four aeroplanes to stem a locust outbreak in Inner Mongolia, home to one-fifth of the country's grasslands.
Officials are apparently concerned that swarms of locusts could undermine efforts to ensure the games pass off flawlessly.
Locusts in northern China are hatching in early June this year instead of July due to warmer and drier weather conditions.
Environmental problems pose some of the biggest last-minute concerns for organizers of the Olympics, particularly dust and filthy air in Beijing, compounded by expected high heat and humidity.