$_ = "your long string";
my $output = "";
while (/\G(.*?)(STARTPRESERVE.*?STOPPRESERVE)/gcs) {
  my ($left, $right) = ($1, $2); # I wish I could shortcut that above :(
  $left =~ s/\s+/ /g;
  $output .= "$left$right";
}
# last bit:
if (/\G(.+)/gcs) {
  my ($left) = $1;
  $left =~ s/\s+/ /g;
  $output .= $left;
}