Why not just use the diff utility?
That is confusing advice, given the fact that the OP is already using diff. I believe the question is how to use it to avoid unexpected behavior (which the OP did not clearly specify).

In reply to Re^2: compare two files line by line and perform a diff on each coressponding line by toolic
in thread compare two files line by line and perform a diff on each coressponding line by dilip_val

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