Question
we had around the base of a tree a thick light yellowish growth spreading out around 5 inches totally surrounding the base of a camphor tree....this growth is also spreading under the grass in different areas and is on the surface of the grass in clumps.   we removed the growth around the tree, and there are now small patches growing again.  what is this fungus and how do you kill it?  

Answer
The Camphor Tree -- that tells me you are growing in some pretty tropical territory.  Far, far away from the Zone 7 Long Island deep freeze we are shivering over right now.  I am going to give this my best shot but I urge you to get a 2nd Opinion as although I know Fungus, I have never CURED a Fungus under a CAMPHOR Tree, or even grown a Camphor myself.  But I think I can put you on the right track.  Because as I said, I know Fungus.

You are self-diagnosing this Fungus -- It sounds like one to me too based on your very clear, succinct description.  And yet, things are not always what they seem.

The Florida Cooperative Extension has a cheat sheet on Cinnamon Camphors (http://edis.ifas.ufl.edu/BODY_ST167) -- "Camphor-Tree" (Cinnamomum camphora) which I reference for advice like: "It may be difficult to maintain a lawn beneath the dense shade of Camphor-Trees and a shade-tolerant groundcover may better suit the purpose."

Over in Australia, where they call this tree "Camphor Laurel", some environmentalists are waging a campaign to contain wild growth of this tree, which is considered a Noxious Weed.  Some label it "a threat to native and introduced animals; to the human population, and to the ecology as a whole".

NRG Researcher Joseph Friend claims that "degradation of soil chemistry and its texture can last many years" causing "soured" soil contaminated with "chemical exudates" (http://www.camphorlaurel.com/).  He writes: "Certain chemotypes of camphor laurel even keep grass and vine species from growing under or onto the tree butts, and older trees may have an entirely clear area with nil vegetation for up to 5 metres radius underneath particularly shady camphors." (http://www.camphorlaurel.com/land-degrade.html)

Oz's Green Left Online News (http://www.greenleft.org.au/1991/10/1458) reports that it is the tree's Juglones -- in this case, Cineol and Camphor, toxins that keep potential competitors from growing under it -- that render soil unusable even after Camphor Tree stands are removed.

Most Juglones only affect certain species.  You have heard (probably) about the problems people have growing anything under a Black Walnut tree.

It's the Juglones in its roots that wreck the soil for SOME plants.  There is a short list of plants that grow under Black Walnuts.  But I don't know where to find a short list of plants -- or grasses -- that will grow under a Camphor Tree.

Closer to home, University of Calif. at Davis Coop Ext (http://ccmg.ucdavis.edu/lawntreesforCCC.htm) lists this Species as one of 11 "Trees Not Recommended for Planting in Lawns", which USC Davis fails for its "very competitive" roots, making the tree "not recommended for small lawns."

The New College of Florida website (http://students.ncf.edu/tamarind.tidwell/cinnamomum.html) catalogs the campus trees -- with photos which include grass growing under their Camphor specimens.  Their text describes these as an "invasive exotic" and warn: "The green fruits, leaves, and roots are toxic and the fruits are high in chemicals known to cause sterility in birds. Camphor trees have been associated with fish kills and the absence of frogs in nearby wetlands."

There are unique advantages, however.  This tree provides berries for local birds and Spicebush Swallowtail Butterfliy Larvae.  The FloriData website (http://www.floridata.com/ref/C/cinn_cam.cfm) posts a photo of a stunning, old Camphor Laurel with the caption: "This camphor tree shades a house in North Florida - a landscape use no longer considered appropriate for this invasive species."

They conclude: "Camphor tree should not be grown in the United States."

Yet, you are successfully cultivating a lawn under this tree.  This sounds like a major accomplishment to me -- with perhaps a dark side.  Possibly the grass underfoot is indeed Fungus-prone -- a shaded area, with all the look of a Fungus attack.  The yellow growth could be harmless.  Please sign off on these possible Yellow Fungi:

Candelaria concolor (http://kmubserv.tg.fh-giessen.de/pm/page.cfm?PRID=20&CFID=44274&CFTOKEN=77161419...)

Common Yolk Lichens/Acarospora  (http://www.perspective.com/nature/fungi/lichens.html#foliose)

and the Yellow Lichen, Cetraria tilesii
(http://www.arctic.uoguelph.ca/cpl/organisms/plants/lichen_intro_frame.htm)

It is my understanding that these would grow and spread too slowly to be the i.d. you are seeking.  But to cross them confidently off the list, I am including them.

Possibly it is yellow Camphor Tree root exudates coloring your groundcover, and the least of your problems.  Question: What does that yellow stuff smell like?

My opinion: Get your soil tested, and take a sprig of this Anonymous Alien Goo to your local Coop Extension for a serious lab workup.  Then let me know what's there.  Conceivably it is exudates of the tree, business as usual.  Personally, I would love to know.