diff --git a/diff.c b/diff.c
index c111eef13ea7c527c9ac7e0d47aad7bd772bca7b..37c886a81588c556c105665d9926f25da377d3e5 100644
--- a/diff.c
+++ b/diff.c
@@ -319,8 +319,10 @@ static int fill_mmfile(mmfile_t *mf, struct diff_filespec *one)
 struct diff_words_buffer {
 	mmfile_t text;
 	long alloc;
-	long current; /* output pointer */
-	int suppressed_newline;
+	struct diff_words_orig {
+		const char *begin, *end;
+	} *orig;
+	int orig_nr, orig_alloc;
 };
 
 static void diff_words_append(char *line, unsigned long len,
@@ -335,80 +337,89 @@ static void diff_words_append(char *line, unsigned long len,
 
 struct diff_words_data {
 	struct diff_words_buffer minus, plus;
+	const char *current_plus;
 	FILE *file;
 };
 
-static void print_word(FILE *file, struct diff_words_buffer *buffer, int len, int color,
-		int suppress_newline)
+static void fn_out_diff_words_aux(void *priv, char *line, unsigned long len)
 {
-	const char *ptr;
-	int eol = 0;
+	struct diff_words_data *diff_words = priv;
+	int minus_first, minus_len, plus_first, plus_len;
+	const char *minus_begin, *minus_end, *plus_begin, *plus_end;
 
-	if (len == 0)
+	if (line[0] != '@' || parse_hunk_header(line, len,
+			&minus_first, &minus_len, &plus_first, &plus_len))
 		return;
 
-	ptr  = buffer->text.ptr + buffer->current;
-	buffer->current += len;
+	/* POSIX requires that first be decremented by one if len == 0... */
+	if (minus_len) {
+		minus_begin = diff_words->minus.orig[minus_first].begin;
+		minus_end =
+			diff_words->minus.orig[minus_first + minus_len - 1].end;
+	} else
+		minus_begin = minus_end =
+			diff_words->minus.orig[minus_first].end;
 
-	if (ptr[len - 1] == '\n') {
-		eol = 1;
-		len--;
-	}
+	if (plus_len) {
+		plus_begin = diff_words->plus.orig[plus_first].begin;
+		plus_end = diff_words->plus.orig[plus_first + plus_len - 1].end;
+	} else
+		plus_begin = plus_end = diff_words->plus.orig[plus_first].end;
 
-	fputs(diff_get_color(1, color), file);
-	fwrite(ptr, len, 1, file);
-	fputs(diff_get_color(1, DIFF_RESET), file);
+	if (diff_words->current_plus != plus_begin)
+		fwrite(diff_words->current_plus,
+				plus_begin - diff_words->current_plus, 1,
+				diff_words->file);
+	if (minus_begin != minus_end)
+		color_fwrite_lines(diff_words->file,
+				diff_get_color(1, DIFF_FILE_OLD),
+				minus_end - minus_begin, minus_begin);
+	if (plus_begin != plus_end)
+		color_fwrite_lines(diff_words->file,
+				diff_get_color(1, DIFF_FILE_NEW),
+				plus_end - plus_begin, plus_begin);
 
-	if (eol) {
-		if (suppress_newline)
-			buffer->suppressed_newline = 1;
-		else
-			putc('\n', file);
-	}
-}
-
-static void fn_out_diff_words_aux(void *priv, char *line, unsigned long len)
-{
-	struct diff_words_data *diff_words = priv;
-
-	if (diff_words->minus.suppressed_newline) {
-		if (line[0] != '+')
-			putc('\n', diff_words->file);
-		diff_words->minus.suppressed_newline = 0;
-	}
-
-	len--;
-	switch (line[0]) {
-		case '-':
-			print_word(diff_words->file,
-				   &diff_words->minus, len, DIFF_FILE_OLD, 1);
-			break;
-		case '+':
-			print_word(diff_words->file,
-				   &diff_words->plus, len, DIFF_FILE_NEW, 0);
-			break;
-		case ' ':
-			print_word(diff_words->file,
-				   &diff_words->plus, len, DIFF_PLAIN, 0);
-			diff_words->minus.current += len;
-			break;
-	}
+	diff_words->current_plus = plus_end;
 }
 
 /*
- * This function splits the words in buffer->text, and stores the list with
- * newline separator into out.
+ * This function splits the words in buffer->text, stores the list with
+ * newline separator into out, and saves the offsets of the original words
+ * in buffer->orig.
  */
 static void diff_words_fill(struct diff_words_buffer *buffer, mmfile_t *out)
 {
-	int i;
-	out->size = buffer->text.size;
-	out->ptr = xmalloc(out->size);
-	memcpy(out->ptr, buffer->text.ptr, out->size);
-	for (i = 0; i < out->size; i++)
-		if (isspace(out->ptr[i]))
-			out->ptr[i] = '\n';
-	buffer->current = 0;
+	int i, j;
+
+	out->size = 0;
+	out->ptr = xmalloc(buffer->text.size);
+
+	/* fake an empty "0th" word */
+	ALLOC_GROW(buffer->orig, 1, buffer->orig_alloc);
+	buffer->orig[0].begin = buffer->orig[0].end = buffer->text.ptr;
+	buffer->orig_nr = 1;
+
+	for (i = 0; i < buffer->text.size; i++) {
+		if (isspace(buffer->text.ptr[i]))
+			continue;
+		for (j = i + 1; j < buffer->text.size &&
+				!isspace(buffer->text.ptr[j]); j++)
+			; /* find the end of the word */
+
+		/* store original boundaries */
+		ALLOC_GROW(buffer->orig, buffer->orig_nr + 1,
+				buffer->orig_alloc);
+		buffer->orig[buffer->orig_nr].begin = buffer->text.ptr + i;
+		buffer->orig[buffer->orig_nr].end = buffer->text.ptr + j;
+		buffer->orig_nr++;
+
+		/* store one word */
+		memcpy(out->ptr + out->size, buffer->text.ptr + i, j - i);
+		out->ptr[out->size + j - i] = '\n';
+		out->size += j - i + 1;
+
+		i = j - 1;
+	}
 }
 
 /* this executes the word diff on the accumulated buffers */
@@ -419,22 +430,34 @@ static void diff_words_show(struct diff_words_data *diff_words)
 	xdemitcb_t ecb;
 	mmfile_t minus, plus;
 
+	/* special case: only removal */
+	if (!diff_words->plus.text.size) {
+		color_fwrite_lines(diff_words->file,
+			diff_get_color(1, DIFF_FILE_OLD),
+			diff_words->minus.text.size, diff_words->minus.text.ptr);
+		diff_words->minus.text.size = 0;
+		return;
+	}
+
+	diff_words->current_plus = diff_words->plus.text.ptr;
+
 	memset(&xpp, 0, sizeof(xpp));
 	memset(&xecfg, 0, sizeof(xecfg));
 	diff_words_fill(&diff_words->minus, &minus);
 	diff_words_fill(&diff_words->plus, &plus);
 	xpp.flags = XDF_NEED_MINIMAL;
-	xecfg.ctxlen = diff_words->minus.alloc + diff_words->plus.alloc;
+	xecfg.ctxlen = 0;
 	xdi_diff_outf(&minus, &plus, fn_out_diff_words_aux, diff_words,
 		      &xpp, &xecfg, &ecb);
 	free(minus.ptr);
 	free(plus.ptr);
+	if (diff_words->current_plus != diff_words->plus.text.ptr +
+			diff_words->plus.text.size)
+		fwrite(diff_words->current_plus,
+			diff_words->plus.text.ptr + diff_words->plus.text.size
+			- diff_words->current_plus, 1,
+			diff_words->file);
 	diff_words->minus.text.size = diff_words->plus.text.size = 0;
-
-	if (diff_words->minus.suppressed_newline) {
-		putc('\n', diff_words->file);
-		diff_words->minus.suppressed_newline = 0;
-	}
 }
 
 typedef unsigned long (*sane_truncate_fn)(char *line, unsigned long len);
@@ -458,7 +481,9 @@ static void free_diff_words_data(struct emit_callback *ecbdata)
 			diff_words_show(ecbdata->diff_words);
 
 		free (ecbdata->diff_words->minus.text.ptr);
+		free (ecbdata->diff_words->minus.orig);
 		free (ecbdata->diff_words->plus.text.ptr);
+		free (ecbdata->diff_words->plus.orig);
 		free(ecbdata->diff_words);
 		ecbdata->diff_words = NULL;
 	}
diff --git a/t/t4034-diff-words.sh b/t/t4034-diff-words.sh
new file mode 100755
index 0000000000000000000000000000000000000000..b22195f8bbbe369349b24ba1a61734087b476b47
--- /dev/null
+++ b/t/t4034-diff-words.sh
@@ -0,0 +1,66 @@
+#!/bin/sh
+
+test_description='word diff colors'
+
+. ./test-lib.sh
+
+test_expect_success setup '
+
+	git config diff.color.old red
+	git config diff.color.new green
+
+'
+
+decrypt_color () {
+	sed \
+		-e 's/.\[1m/<WHITE>/g' \
+		-e 's/.\[31m/<RED>/g' \
+		-e 's/.\[32m/<GREEN>/g' \
+		-e 's/.\[36m/<BROWN>/g' \
+		-e 's/.\[m/<RESET>/g'
+}
+
+word_diff () {
+	test_must_fail git diff --no-index "$@" pre post > output &&
+	decrypt_color < output > output.decrypted &&
+	test_cmp expect output.decrypted
+}
+
+cat > pre <<\EOF
+h(4)
+
+a = b + c
+EOF
+
+cat > post <<\EOF
+h(4),hh[44]
+
+a = b + c
+
+aa = a
+
+aeff = aeff * ( aaa )
+EOF
+
+cat > expect <<\EOF
+<WHITE>diff --git a/pre b/post<RESET>
+<WHITE>index 330b04f..5ed8eff 100644<RESET>
+<WHITE>--- a/pre<RESET>
+<WHITE>+++ b/post<RESET>
+<BROWN>@@ -1,3 +1,7 @@<RESET>
+<RED>h(4)<RESET><GREEN>h(4),hh[44]<RESET>
+<RESET>
+a = b + c<RESET>
+
+<GREEN>aa = a<RESET>
+
+<GREEN>aeff = aeff * ( aaa )<RESET>
+EOF
+
+test_expect_success 'word diff with runs of whitespace' '
+
+	word_diff --color-words
+
+'
+
+test_done