Comparison of 2 text files: what and where changes were made?

Question

imagine you have 2 texfiles (let's say 500kB - 3 MB large): the first is original, the second is the update of this original. How can I find out, what was changed (inserted, deleted) and where the changes took place (in the update file in comparison to original)?

1. Is there any tool or library somewhere?
2. Resides this function in any well known text editors?
3. Does anybody know an algorithm? Or what are the common methods to solve it on the large scale?
4. What would you do if you face this kind of problem?

Thanx for your ideas...

Answer 1

What you're describing sounds exactly like a diff-style tool. This sort of functionality is available in many of the more advanced text editors.

Answer 2

You can try Notepad++ it is an open source text editor that has a compare files plug in.