The s modifier might help you.
The  //s regex modifier would not seem helpful since it modifies the behavior of the  . (dot) regex metacharacter, and this metacharacter is used in neither the OP nor in your reply.

The OPer seems to be looking for a simple way to get the contents of the file as a single string. A simple way to do this is with the idiomatic statement
    my $string = do { local $/;  <$fh> }
(where  $fh is an already-opened file handle). After modification, this string can be printed with a single  print statement. Caution: this approach does not scale well to files of more than several megabytes (depending on your system's memory).

Also, the following regex accepts only balanced double-quotes on the "string" and requires the trailing '{' character. 

>perl -wMstrict -le
"my $s = join '', @ARGV;
 $s = eval qq[qq[$s]];
 my $words = qr{ foo | bar }xms;
 $s =~ s{ (Kw \s+) (\"?) ($words) (\2 \s* \{) }{$1${2}1_$3$4}xmsg;
 print 'output:';
 print $s;
"
"Kw \n foo \n { \n Kw \n \"bar\"\n { \n Kw foo { Kw \"foo\" { "
"Kw \"foo { Kw foo\" { Kw foo Kw {"
output:
Kw
 1_foo
 {
 Kw
 "1_bar"
 {
 Kw 1_foo { Kw "1_foo" { Kw "foo { Kw foo" { Kw foo Kw {

[download]
Updates:
  1. The  //g modifier which you use in your reply is, however, critical in a single-string solution!
  2. Added regex solution.

In reply to Re^2: Help with multiple line regex subsitution by AnomalousMonk
in thread Help with multiple line regex subsitution by gator456

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