here is the input data

<input>
This is to test. this is to test
<p>This is to test. This is
to test</p>
<p>This is to test. This is
to test</p>
This is to test.
this is to test
</input>
[download]

<output>
This is to test. this is to test
<p>This is to test. This is to test</p>
<p>This is to test. This is to test</p>
This is to test.
this is to test
</output>
[download]

$infile = $ARGV[0];

open(IN, '<', "temp.in") || die "\nCan't open temp.in \n";
open(OUT, '>' "temp.out");
$/="";
while(<IN>)
{
    if($_=~s/(.*)&lt;p&gt;(.*)\<\/p\>(.*)//ms)
    {
        $pre =  $1;
        $par =  $2;
        $pos =  $3;

        $par=~s#\n# #ig;
        print OUT "$pre&lt;p&gt;$par\<\/p\>$pos";
    }
}
close(IN);
close(OUT);
[download]

Have a look at Writeup Formatting Tips.
To your problem: The following program did the trick for me:

#!perl

use strict;
use warnings;

{ # braces for localization of $/
   local $/ = '<p>'; # end of record is now <p>
   print scalar <DATA>; 
      # first chunk contains everything before first <p> tag, just pri
+nt
   for (<DATA>) {
      s@([\d\D]*?</p>)@ my $var = $1; $var =~ s!\n! !g; $var @e; 
         # substitute newlines by spaces before the closing </p> tag
      print;
   }
}
__DATA__
This is to test. this is to test
<p>This is to test. This is
to test</p>
<p>This is to test. This is
to test</p>
This is to test.
this is to test
[download]

Hope this helped.
CombatSquirrel.

---

Entropy is the tendency of everything going to hell.

Your code does the magic. Thanks you very much

but one small doubt: what does "$var @e;" mean, particularly "@e", what does it mean here.

can you please suggest me some good perl book to handle this kind of stuffs.

once again, thanks a lot