This may help: http://forums.microsoft.com/MSDN/ShowPost.aspx PostID=99624&SiteID=1
<<Unfortunately we don't have a handy way to do that on the dialog. You can use Tools -> Options -> Source Control -> Visual Studio Team Foundation Server -> Configure User Tools... to set up your diff tool and supply command line arguments. The default diff tool is diffmerge.exe and the command line argument is /ignorespace. You can run diffmerge / to see other options.>>
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