Water quality and seaweed flora were studied during prawn farming activities at various sites of Chilika Lake. The brackish water lagoon has become eutrophicated as it receives the waste material of agricultural, aqua cultural and domestic sewage as well as the release of extracellular nitrogenous substances released from the fishing activities. Conservation and proper management of Chilika ecosystem is essential not only for preserving biodiversity but also to save and promote the existence of economically important seaweeds. Four seaweeds Enteromorpha intestinalis, Chondrous crispus, Gracilaria verrucosa and Polysiphonia sertularioides were examined for their efficiency in uptake of nitrate and ammonium to access the potentiality of these algae for removal of nutrients from aqua culture effluents. Enteromorpha intestinalis and Gracilaria verrucosa removed nitrate from the medium at considerable higher than those measured for Chondrous crispus and Polysiphonia sertularioides. At similar temperature and irradiance the Vmax and Ks of nitrate uptake in E. intestinalis and G. verrucosa are thrice that of Chondrous crispus. The result are discussed in designing protocols for management of water quality in fishing zones for removal of nitrate and ammonia from the fish culture sites in Chilika lake.