You appear to be looking for a word-by-word diff utility. Googling for it gives me few results, there appears to have been at one time such a utlility in Perl, but the domain name has dropped off the earth.

It appears to be quite popular for wikis, and a popular implementation seems to be the diff utility from Wikipedia, available in the MediaWiki package.

GNU wdiff, as suggested in one of the pages I linked to above, seems to be using quite a crude methodology.

Now if you want to try building an implementation using Algorithm::Diff, then I'd first try doing a crude diff using a line by line comparison, and once you pinpointed the differences in lines, split these lines into components (words, punctuation, optionally whitespace too) and diff again between the word lists.