Thanks thelenm I like your answer. I did not think to use hashes.

But I see a problem, the files are large, about 500000 lines, each line is up to 1275 characters (avg about 250). That's about 500000 x 250 x 2 = 238 Mbytes of data in the hashes. The data will grow in the future. I think that will be rather stressful for the machine it's running on:) I think I'll try sorting the files beforehand, and keep only two lines in memory. Something like:

#code fragment leaving out parseing, reporting, use strict etc.

my ($leftkey,$leftvalue) = split_line(scalar <LEFTFILE>);
my ($rightkey,$rightvalue) = split_line(scalar <RIGHTFILE>);

# work through both files sequentially matching advances by key
while(defined($leftkey) and defined($rightkey))
{
    my $compare = $leftkey cmp $rightkey;
    if($compare == 0)
    {
        if ($leftvalue ne $rightvalue)
        {
            value_diff($leftkey, $leftvalue, $rightkey, $rightvalue);
        }
        ($leftkey,$leftvalue) = split_line(scalar <LEFTFILE>);
        ($rightkey,$rightvalue) = split_line(scalar <RIGHTFILE>);
        next;
    }
    elsif($compare > 0)
    {
        missing_left($rightkey,$rightvalue);
        ($rightkey,$rightvalue) = split_line(scalar <RIGHTFILE>);
        next;
    }
    else
    {
        missing_right($leftkey,$leftvalue);
        ($leftkey,$leftvalue) = split_line(scalar <LEFTFILE>);
        next;
    }
}
# are there missing items at end of the files?
while(defined($leftkey))
{
    missing_right($leftkey,$leftvalue);
    ($leftkey,$leftvalue) = split_line(scalar <LEFTFILE>);
}
while(defined($rightkey))
{
    missing_left($rightkey,$rightvalue);
    ($rightkey,$rightvalue) = split_line(scalar <RIGHTFILE>);
}
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