Sounds like you have a fungal disease. The fuzzy white stuff is called mycelium. The weather in CT has been perfect for fungal diseases this year, especially with the recent thunderstorms that has kept the grass wet for 24 hours. Mycelium isn't present in all fungal diseases, but one of the more common ones is pythium blight, also known as grease spot. This can be self limiting, or it can continue to spread. You can treat fungi with fungicides such as Immunox (Home Depot), Heritage, Eagle (Lesco) and others. Heritage is probably the best one, but if you don't have a Lesco nearby I would go to Home Depot and buy some Immunox and spot treat the areas where you see the mycelium as well as patches of dying grass.

Also there are some people that recommend using milk and baking soda as natural treatments for fungal outbreaks. I have never used either, and I am not knowledgable on how much to use, and how well they work. I am sure someone will add a post about these remedies.

I have this same problem, it's spreading really fast. Can i treat the healthy grass around it as well to prevent itfrom spreading? I also need to fertilize now, can I perform both treatments at the same time. Any help would be appreciated.

Yes, you can treat the healthy grass as well. Fungicides are actually more effective when applied before disease starts. Why do you need to fertilize now? Where are you located and what kind of grass do you have?