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My pepper seeds have a fur coat .  they were sown in loo roll inners  in a heated propagator  and they've gone mouldy  is this a cause  for concern ,i grew my tomato's the same way and they were fine .   

Were they from an open packet or saved seeds?

How long have they been in? I Wouldn't despair just yet, as there are plenty of harmless fungi that can grow on a seed coat without doing any harm to the seedling. A lot of my pepper seeds looked a bit furry but have germinated well and now look very healthy.

Sorry should have explained more the seeds them self's are fine and seem to be growing well at the moment ,But the compost it self looks like a animal of some kind has gone to sleep in the loo roll inners the fur is that thick  ,do you think it will rot the peppers in the future

If the peppers have germinated, give them some ventilation, and maybe lower the temperature a bit. Fungi flourish in warm damp conditions.

Loo rolls and compost surface frequently go furry. Often it's a saprophytic fungi that lives on dead material, rather than a parasitic one that needs live material. If the seedlings are happy, maybe reduce humidity as Robert says, but I wouldn't worry too much

I'm with Pescador,
posted a similar problem a couple of years ago. I don't use loo rolls now, there are better ways depending on your situation.