google-diff-match-patch will produce some very nice prose diffs, especially if you tune the defaults a little to look further back/ahead. https://code.google.com/p/google-diff-match-patch/ - it is availabke in Java, JavaScript, Dart, C++, C#, Objective C, Lua and Python.
The library (Common Lisp) is on Github: https://github.com/gigamonkey/monkeylib-prose-diff