My chili plant is getting white fungus on its stem. Two days back I saw it. Another plant also seemed to be in same situation and it died today. Today I watched it carefully and it was a white bug sitting on stem. I didn't take a pic but I pulled the plant out in order to save the others.
Kindly guide me because one other small plant is getting infected in the same manner, so What should I do? I got a growing tomato plant but it's not infected yet. 
Given its size, I think it could be the either a mealybug or a planthopper larva. It doesn't look like scale.
Whatever it is, given that it is quite large and there aren't so many of them you could just remove them all. The fluff is not fungus so you can just clean it.
Looks like Sclerotinia sclerotinorum, a very very bad and contagious fungus. If you could take a closer picture of the white mold on the stem, that would help.
If this is white mold we need to do some surgery and get these plants isolated. The problem is, you used garden soil that probably had some spores. Only use potting soil. If you want to use those pots again, clean them out very very well with bleach, scrub and allow to dry.
Use sterilized potting soil that doesn't have added fertilizer or water gels/sponges. Fill 1/3 +/- transplant NEW starts, fill and press down gently to firm and get air pockets in soil to firm. I also take the pot and tamp gently on the table or floor. Keep an inch from soil surface to rim of pot for proper watering. Water thoroughly, put pieces of tile under the pot to allow air space beneath your pot for drainage.
Clean all surfaces with windex or water and bleach. Just ONE spore (microscopic) will infect a plant. This is one of the worst diseases around. Ruins vast expanses of soy, tomatoes and a wide variety of cash crop plants. Dump your plants and soil into black plastic trash bags, label and take to your dump to ask what to do with this disease. They had an enclosed incinerator at one place but they might have a better solution these days (7 years ago was my first introduction to this disease)...I had been given a plant that the guy had used garden soil in the pot. I of course transplanted it into potting soil but it had already been infected.
If you cut into the stem, preferably in a thickened Y on the main stem, you will find black pellets that look like rat poop! Really weird. We need to ID much more positively before we do that, okay? Isolate your plants, garage is good.
Closer picture and if you can scrap a glob of that white stuff off to see if it is an insect, possibly mealy bug. Take a picture of that and send as well. If it is we can save your plants and walk you through a few treatments. Tell me about fertilizers, soil (is this garden soil)?
