You could use unset() on $array[1], but then the array indices wouldnt be shifted properly.
To avoid this, you could use:
array_splice($array, 1, 1);
A simple alternative solution would be:
$array = array("yellow", "blu", "white", "green");
$temp = array();
foreach ($array as $value) {
if ($value != "blu")
$temp[] = $value;
}
$array = $temp;