You might be able to use colordiff
for this.
In their man page:
Any options passed to colordiff are
passed through to diff except for the
colordiff-specific option 'difftype',
e.g.
colordiff --difftype=debdiff file1
file2
Valid values for 'difftype' are: diff,
diffc, diffu, diffy, wdiff, debdiff;
these correspond to plain diffs,
context diffs, unified diffs,
side-by-side diffs, wdiff output and
debdiff output respectively. Use these
overrides when colordiff is not able
to determine the diff-type
automatically.
I haven't tested it, but the side-by-side output (as produced by diff -y file1 file2
) might give you the equivalent of in-line differences.