Small Engine Troubleshooting Problems? Ask a Mechanic Now.
The problem with your engine is most likely due to worn internal engine components such as a worn cylinder/rings or a worn valve guide that is allowing oil between the stem of the valve and guide. For both of these conditions the engine will need to come apart. How long has this problem been happening? Have you done any other work to it lately?
Did the mower runs fine the last time you used it? Have you done any work to it lately? How long has it been since it was last used?
Have you ever cleaned the breather assembly? See attached link for the serivce manual for your engine. It will give you the procedure on removing and cleaning the breather as well as the valve adjustment.