MWE for alg

\documentclass{article}
\usepackage{algorithm}


% Option 1: algpseudocode
%\usepackage[noend]{algpseudocode}

\newcounter{algsubstate}
\makeatletter
\renewcommand{\thealgsubstate}{\arabic{ALG@line}.\alph{algsubstate}}
\makeatother
\newenvironment{algsubstates}
  {\setcounter{algsubstate}{0}%
   \renewcommand{\State}{%
     \refstepcounter{algsubstate}%
     \Statex {\footnotesize\alph{algsubstate}:}\space}}
  {}


% Option 2: algorithmic
\usepackage{algorithmic}

\newcounter{xalgsubstate}
\makeatletter
\renewcommand{\thexalgsubstate}{\arabic{ALG@line}.\alph{xalgsubstate}}
\makeatother
\newenvironment{xalgsubstates}
  {\setcounter{xalgsubstate}{0}%
   \renewcommand{\STATE}{%
     \refstepcounter{xalgsubstate}%
     \STATE {\footnotesize\alph{xalgsubstate}:}\space}}
  {}


\begin{document}


% Option 1
%\begin{algorithm}
%\begin{algorithmic}[1]
%\State First state
%  \begin{algsubstates}
%  \State First substate
%  \State Second substate
%  \end{algsubstates}
%\State Second state
%\end{algorithmic}
%\end{algorithm}


% Option 2 (not working, 'missing number, treated as zero' error)
\begin{algorithm}
\begin{algorithmic}[1]
\STATE{First state}
  \begin{xalgsubstates}
  \STATE{First substate}
  \STATE{Second substate}
  \end{xalgsubstates}
\STATE{Second state}
\end{algorithmic}
\end{algorithm}


\end{document}