Thank you for your responses. But the question was answered in another forum. I also asked this question here: http://stackoverflow.com/questions/11070174/tagging-the-differencies-in-both-files and I got a good answer. the code below does the task that I want:

diff --old-line-format "<Diff></Diff>%c'\012'" \
     --new-line-format "<Diff>%l</Diff>%c'\012'" \
     File1.txt File2.txt > NewFile1.txt

diff --old-line-format "<Diff>%l</Diff>%c'\012'" \
     --new-line-format "<Diff></Diff>%c'\012'" \
     File1.txt File2.txt > NewFile2.txt
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