It works fine at the CLI but the output from diff is not displayed in the webpage, I can see why that is but dont know how to fix the issue... Also if anyone has any improvements please say. The reason I have not used any modules for HTML prasing etc... is because I haven't got that far in my study and i'd like to see what I can code with base perl before I branch out.

If you don't use the modules for anything else -- use them for escaping the output from your diff command. Diff lines start with '<' and '>', which are special in HTML (as is '&') You need to encode them as : &lt; &gt; and &amp;

Your other option is to serve the page as text/plain as opposed to text/html