I guess I'm not understanding how this is supposed to work. When reading in a line of input, generally $_ will contain everything up to the next newline character, in which case you can just chomp that, as in...

open FILE, $filename;

while (<FILE>) {
 chomp($_); # removes \n.
 # do something to $_
}
[download]

I can't think of a situation where I've ever encountered a newline char in the middle of a line. Could you elaborate a little bit more on the type of input data you're working with?

Taking another look at your post, it seems as if what you actually want to do is remove paragraph tags from your html. In which case, apart from what others have said, you'll be wanting to look at a regex that looks more like: $new=~s/<p>|<\/p>//gsi