diff --git a/trac/versioncontrol/diff.py b/trac/versioncontrol/diff.py
index 8034461..27fd525 100644
--- a/trac/versioncontrol/diff.py
+++ b/trac/versioncontrol/diff.py
@@ -14,12 +14,13 @@
 #
 # Author: Christopher Lenz <cmlenz@gmx.de>
 
+import re
+from difflib import SequenceMatcher
+
+from trac.util.compat import all
 from trac.util.html import escape, Markup
 from trac.util.text import expandtabs
 
-from difflib import SequenceMatcher
-import re
-
 __all__ = ['get_diff_options', 'hdf_diff', 'diff_blocks', 'unified_diff']
 
 
@@ -50,47 +51,49 @@ def _get_opcodes(fromlines, tolines, ignore_blank_lines=False,
     'equal' block.
     """
 
-    def is_ignorable(tag, fromlines, tolines):
-        if tag == 'delete' and ignore_blank_lines:
-            if ''.join(fromlines) == '':
-                return True
-        elif tag == 'insert' and ignore_blank_lines:
-            if ''.join(tolines) == '':
-                return True
-        elif tag == 'replace' and (ignore_case or ignore_space_changes):
-            if len(fromlines) != len(tolines):
-                return False
-            def f(str):
-                if ignore_case:
-                    str = str.lower()
-                if ignore_space_changes:
-                    str = ' '.join(str.split())
-                return str
-            for i in range(len(fromlines)):
-                if f(fromlines[i]) != f(tolines[i]):
-                    return False
-            return True
+    if ignore_case or ignore_space_changes:
+        def normalize(value):
+            if ignore_case:
+                value = value.lower()
+            if ignore_space_changes:
+                value = ' '.join(value.split())
+            return value
+    else:
+        normalize = None
 
-    matcher = SequenceMatcher(None, fromlines, tolines)
-    previous = None
-    for tag, i1, i2, j1, j2 in matcher.get_opcodes():
-        if tag == 'equal':
-            if previous:
-                previous = (tag, previous[1], i2, previous[3], j2)
-            else:
-                previous = (tag, i1, i2, j1, j2)
-        else:
-            if is_ignorable(tag, fromlines[i1:i2], tolines[j1:j2]):
-                if previous:
-                    previous = 'equal', previous[1], i2, previous[3], j2
-                else:
-                    previous = 'equal', i1, i2, j1, j2
+    def filter_ignores(opcodes):
+        for tag, i1, i2, j1, j2 in opcodes:
+            if normalize and tag == 'replace':
+                matcher = SequenceMatcher(None,
+                                          map(normalize, fromlines[i1:i2]),
+                                          map(normalize, tolines[j1:j2]))
+                for tag, norm_i1, norm_i2, norm_j1, norm_j2 in \
+                        matcher.get_opcodes():
+                    yield tag, i1 + norm_i1, i1 + norm_i2, \
+                               j1 + norm_j1, j1 + norm_j2
                 continue
-            if previous:
-                yield previous
+            if ignore_blank_lines and tag == 'delete':
+                if all(fromlines[n] == '' for n in xrange(i1, i2)):
+                    tag = 'equal'
+            if ignore_blank_lines and tag == 'insert':
+                if all(tolines[n] == '' for n in xrange(j1, j2)):
+                    tag = 'equal'
             yield tag, i1, i2, j1, j2
-            previous = None
 
+    matcher = SequenceMatcher(None, fromlines, tolines)
+    opcodes = matcher.get_opcodes()
+    if ignore_blank_lines or ignore_case or ignore_space_changes:
+        opcodes = filter_ignores(opcodes)
+    previous = None
+    for current in opcodes:
+        if previous is None:
+            previous = current
+        elif previous[0] == current[0]:
+            previous = (previous[0], previous[1], current[2],
+                                     previous[3], current[4])
+        else:
+            yield previous
+            previous = current
     if previous:
         yield previous
 
diff --git a/trac/versioncontrol/tests/diff.py b/trac/versioncontrol/tests/diff.py
index cc0f02f..2977da6 100644
--- a/trac/versioncontrol/tests/diff.py
+++ b/trac/versioncontrol/tests/diff.py
@@ -56,6 +56,40 @@ class DiffTestCase(unittest.TestCase):
                                      ignore_space_changes=1)
         self.assertEqual(('equal', 0, 2, 0, 2), opcodes.next())
 
+    def test_space_changes_2(self):
+        left = """\
+try:
+    try:
+        func()
+        commit()
+    except:
+        rollback()
+finally:
+    cleanup()
+"""
+        left = left.splitlines()
+        right = """\
+try:
+    func()
+    commit()
+except:
+    rollback()
+finally:
+    cleanup()
+"""
+        right = right.splitlines()
+        opcodes = diff._get_opcodes(left, right, ignore_space_changes=0)
+        self.assertEqual(('equal', 0, 1, 0, 1), opcodes.next())
+        self.assertEqual(('replace', 1, 6, 1, 5), opcodes.next())
+        self.assertEqual(('equal', 6, 8, 5, 7), opcodes.next())
+        self.assertRaises(StopIteration, opcodes.next)
+
+        opcodes = diff._get_opcodes(left, right, ignore_space_changes=1)
+        self.assertEqual(('equal', 0, 1, 0, 1), opcodes.next())
+        self.assertEqual(('delete', 1, 2, 1, 1), opcodes.next())
+        self.assertEqual(('equal', 2, 8, 1, 7), opcodes.next())
+        self.assertRaises(StopIteration, opcodes.next)
+
     def test_case_changes(self):
         opcodes = diff._get_opcodes(['A', 'B b'], ['A', 'B B'],
                                      ignore_case=0)