Will fertilizing lilies cause an algea bloom?

The proper environment for algae will cause an algae bloom. Depending on species and environment, it may or may not last. If you added something and an algae bloom occurred, likely when the added nutrient is depleted it will also diminish.
If your tank has been set up for some time, there may be enough nutrients in the substrate to provide for it. If you recently added it to the tank, give it some time. Most plants take a little while to re-adjust.
I add phosphate all the time, no algae blooms. ;)
 
Water lillies are usually VERY heavy feeders. I would guess this would apply to the smaller tropical ones as well as the garden types. They would probably be happy growing in raw sewage (now there's an idea for a pond- lillies and tubifex!)

For instance, for my outdoor lillies, I put them in a plastic dishpan (without any holes! ) with about 1-1/2 inches of composted chicken manure on the bottom, followed by a layer of hartz ph5 cat litter, which forms a barrier to keep the manure from fouling the water. I top that with sand or gravel. I also throw a couple lily tabs into the manure layer for some trace minerals. They do very well with this, and by the end of the season the pans are a solid mass of roots.

Almost any other plant would be burned away by such a rich substrate.

By the above, I'd say that you probably don't want to plant even a dwarf lily directly in the substrate of an aquarium. What I'm doing for that is to find a small glass, or plastic cup, and do a miniture version of the above ( minus the chicken manure !!! ) and make sure any fertilizer is below the barrier level.

I'd do some water changes, and feed the lillies so the food doesn't get into the water column.
 
That brings up a point of interest. Did you by chance use a fertilizer tab/stick and it has leached into the water column? It could take a few weeks for that to disappear if you don't remove the entire source.

FWIW, I grow tiger lotus easily enough in a mature substrate without added fertilization to the soil. Not sure what type of lilly you're referring to.
 
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