Producing an view of a text's revision history in Python

Programmer Question

I have two versions of a piece of text and I want to produce an HTML view of its revision similar to what Google Docs or Stack Overflow displays. I need to do this in Python. I don't know what this technique is called but I assume that it has a name and hopefully there is a Python library that can do it.

Version 1:

William Henry "Bill" Gates III (born
October 28, 1955)[2] is an American
business magnate, philanthropist, and
chairman[3] of Microsoft, the software
company he founded with Paul Allen.

Version 2:

William Henry "Bill" Gates III (born
October 28, 1955)[2] is a business
magnate, philanthropist, and
chairman[3] of Microsoft, the software
company he founded with Paul Allen.
He is American.

The desired output:

William Henry "Bill" Gates III (born
October 28, 1955)[2] is an American business
magnate, philanthropist, and
chairman[3] of Microsoft, the software
company he founded with Paul Allen.
He is American.

Using the diff command doesn't work because it tells me which lines are different but not which columns/words are different.

$ echo 'William Henry "Bill" Gates III (born October 28, 1955)[2] is an American business magnate, philanthropist, and chairman[3] of Microsoft, the software company he founded with Paul Allen.' > oldfile
$ echo 'William Henry "Bill" Gates III (born October 28, 1955)[2] is a business magnate, philanthropist, and chairman[3] of Microsoft, the software company he founded with Paul Allen.  He is American.' > newfile
$ diff -u oldfile newfile
--- oldfile 2010-04-30 13:32:43.000000000 -0700
+++ newfile 2010-04-30 13:33:09.000000000 -0700
@@ -1 +1 @@
-William Henry "Bill" Gates III (born October 28, 1955)[2] is an American business magnate, philanthropist, and chairman[3] of Microsoft, the software company he founded with Paul Allen.
+William Henry "Bill" Gates III (born October 28, 1955)[2] is a business magnate, philanthropist, and chairman[3] of Microsoft, the software company he founded with Paul Allen.  He is American.' > oldfile

Find the answer here