diff --git a/testing/_diff.ts b/testing/_diff.ts
index 7d659acd2621..ec632915402d 100644
--- a/testing/_diff.ts
+++ b/testing/_diff.ts
@@ -15,6 +15,7 @@ export enum DiffType {
 export interface DiffResult<T> {
   type: DiffType;
   value: T;
+  details?: Array<DiffResult<T>>;
 }
 
 const REMOVED = 1;
@@ -226,3 +227,113 @@ export function diff<T>(A: T[], B: T[]): Array<DiffResult<T>> {
     ),
   ];
 }
+
+/**
+ * Renders the differences between the actual and expected strings
+ * Partially inspired from https://github.com/kpdecker/jsdiff
+ * @param A Actual string
+ * @param B Expected string
+ */
+export function diffstr(A: string, B: string) {
+  function tokenize(string: string, { wordDiff = false } = {}): string[] {
+    if (wordDiff) {
+      // Split string on whitespace symbols
+      const tokens = string.split(/([^\S\r\n]+|[()[\]{}'"\r\n]|\b)/);
+      // Extended Latin character set
+      const words =
+        /^[a-zA-Z\u{C0}-\u{FF}\u{D8}-\u{F6}\u{F8}-\u{2C6}\u{2C8}-\u{2D7}\u{2DE}-\u{2FF}\u{1E00}-\u{1EFF}]+$/u;
+
+      // Join boundary splits that we do not consider to be boundaries and merge empty strings surrounded by word chars
+      for (let i = 0; i < tokens.length - 1; i++) {
+        if (
+          !tokens[i + 1] && tokens[i + 2] && words.test(tokens[i]) &&
+          words.test(tokens[i + 2])
+        ) {
+          tokens[i] += tokens[i + 2];
+          tokens.splice(i + 1, 2);
+          i--;
+        }
+      }
+      return tokens.filter((token) => token);
+    } else {
+      // Split string on new lines symbols
+      const tokens = [], lines = string.split(/(\n|\r\n)/);
+
+      // Ignore final empty token when text ends with a newline
+      if (!lines[lines.length - 1]) {
+        lines.pop();
+      }
+
+      // Merge the content and line separators into single tokens
+      for (let i = 0; i < lines.length; i++) {
+        if (i % 2) {
+          tokens[tokens.length - 1] += lines[i];
+        } else {
+          tokens.push(lines[i]);
+        }
+      }
+      return tokens;
+    }
+  }
+
+  // Create details by filtering revelant word-diff for current line
+  // and merge "space-diff" if surrounded by word-diff for cleaner displays
+  function createDetails(
+    line: DiffResult<string>,
+    tokens: Array<DiffResult<string>>,
+  ) {
+    return tokens.filter(({ type }) =>
+      type === line.type || type === DiffType.common
+    ).map((result, i, t) => {
+      if (
+        (result.type === DiffType.common) && (t[i - 1]) &&
+        (t[i - 1]?.type === t[i + 1]?.type)
+      ) {
+        result.type = t[i - 1].type;
+      }
+      return result;
+    });
+  }
+
+  // Compute multi-line diff
+  const diffResult = diff(tokenize(`${A}\n`), tokenize(`${B}\n`));
+  const added = [], removed = [];
+  for (const result of diffResult) {
+    if (result.type === DiffType.added) {
+      added.push(result);
+    }
+    if (result.type === DiffType.removed) {
+      removed.push(result);
+    }
+  }
+
+  // Compute word-diff
+  const aLines = added.length < removed.length ? added : removed;
+  const bLines = aLines === removed ? added : removed;
+  for (const a of aLines) {
+    let tokens = [] as Array<DiffResult<string>>,
+      b: undefined | DiffResult<string>;
+    // Search another diff line with at least one common token
+    while (bLines.length) {
+      b = bLines.shift();
+      tokens = diff(
+        tokenize(a.value, { wordDiff: true }),
+        tokenize(b?.value ?? "", { wordDiff: true }),
+      );
+      if (
+        tokens.some(({ type, value }) =>
+          type === DiffType.common && value.trim().length
+        )
+      ) {
+        break;
+      }
+    }
+    // Register word-diff details
+    a.details = createDetails(a, tokens);
+    if (b) {
+      b.details = createDetails(b, tokens);
+    }
+  }
+
+  return diffResult;
+}
diff --git a/testing/_diff_test.ts b/testing/_diff_test.ts
index ec40c191c2ea..638cb0c44f8c 100644
--- a/testing/_diff_test.ts
+++ b/testing/_diff_test.ts
@@ -1,5 +1,5 @@
 // Copyright 2018-2021 the Deno authors. All rights reserved. MIT license.
-import { diff } from "./_diff.ts";
+import { diff, diffstr } from "./_diff.ts";
 import { assertEquals } from "../testing/asserts.ts";
 
 Deno.test({
@@ -109,3 +109,41 @@ Deno.test({
     ]);
   },
 });
+
+Deno.test({
+  name: '"a b c d" vs "a b x d e" (diffstr)',
+  fn(): void {
+    const diffResult = diffstr(
+      [..."abcd"].join("\n"),
+      [..."abxde"].join("\n"),
+    );
+    assertEquals(diffResult, [
+      { type: "common", value: "a\n" },
+      { type: "common", value: "b\n" },
+      { type: "added", value: "x\n" },
+      {
+        type: "removed",
+        value: "c\n",
+        details: [{ type: "removed", value: "c" }, {
+          type: "common",
+          value: "\n",
+        }],
+      },
+      { type: "common", value: "d\n" },
+      {
+        type: "added",
+        value: "e\n",
+        details: [
+          {
+            type: "added",
+            value: "e",
+          },
+          {
+            type: "common",
+            value: "\n",
+          },
+        ],
+      },
+    ]);
+  },
+});
diff --git a/testing/asserts.ts b/testing/asserts.ts
index edc91b89051a..291a5a6a5310 100644
--- a/testing/asserts.ts
+++ b/testing/asserts.ts
@@ -2,8 +2,17 @@
 // This module is browser compatible. Do not rely on good formatting of values
 // for AssertionError messages in browsers.
 
-import { bold, gray, green, red, stripColor, white } from "../fmt/colors.ts";
-import { diff, DiffResult, DiffType } from "./_diff.ts";
+import {
+  bgGreen,
+  bgRed,
+  bold,
+  gray,
+  green,
+  red,
+  stripColor,
+  white,
+} from "../fmt/colors.ts";
+import { diff, DiffResult, diffstr, DiffType } from "./_diff.ts";
 
 const CAN_NOT_DISPLAY = "[Cannot display]";
 
@@ -40,12 +49,16 @@ export function _format(v: unknown): string {
  * Colors the output of assertion diffs
  * @param diffType Difference type, either added or removed
  */
-function createColor(diffType: DiffType): (s: string) => string {
+function createColor(
+  diffType: DiffType,
+  { background = false } = {},
+): (s: string) => string {
   switch (diffType) {
     case DiffType.added:
-      return (s: string): string => green(bold(s));
+      return (s: string): string =>
+        background ? bgGreen(white(s)) : green(bold(s));
     case DiffType.removed:
-      return (s: string): string => red(bold(s));
+      return (s: string): string => background ? bgRed(white(s)) : red(bold(s));
     default:
       return white;
   }
@@ -66,8 +79,11 @@ function createSign(diffType: DiffType): string {
   }
 }
 
-function buildMessage(diffResult: ReadonlyArray<DiffResult<string>>): string[] {
-  const messages: string[] = [];
+function buildMessage(
+  diffResult: ReadonlyArray<DiffResult<string>>,
+  { stringDiff = false } = {},
+): string[] {
+  const messages: string[] = [], diffMessages: string[] = [];
   messages.push("");
   messages.push("");
   messages.push(
@@ -79,8 +95,14 @@ function buildMessage(diffResult: ReadonlyArray<DiffResult<string>>): string[] {
   messages.push("");
   diffResult.forEach((result: DiffResult<string>): void => {
     const c = createColor(result.type);
-    messages.push(c(`${createSign(result.type)}${result.value}`));
+    const line = result.details?.map((detail) =>
+      detail.type !== DiffType.common
+        ? createColor(detail.type, { background: true })(detail.value)
+        : detail.value
+    ).join("") ?? result.value;
+    diffMessages.push(c(`${createSign(result.type)}${line}`));
   });
+  messages.push(...(stringDiff ? [diffMessages.join("")] : diffMessages));
   messages.push("");
 
   return messages;
@@ -207,11 +229,12 @@ export function assertEquals(
   const actualString = _format(actual);
   const expectedString = _format(expected);
   try {
-    const diffResult = diff(
-      actualString.split("\n"),
-      expectedString.split("\n"),
-    );
-    const diffMsg = buildMessage(diffResult).join("\n");
+    const stringDiff = (typeof actual === "string") &&
+      (typeof expected === "string");
+    const diffResult = stringDiff
+      ? diffstr(actual as string, expected as string)
+      : diff(actualString.split("\n"), expectedString.split("\n"));
+    const diffMsg = buildMessage(diffResult, { stringDiff }).join("\n");
     message = `Values are not equal:\n${diffMsg}`;
   } catch {
     message = `\n${red(CAN_NOT_DISPLAY)} + \n\n`;
@@ -309,11 +332,12 @@ export function assertStrictEquals(
         }\n`;
     } else {
       try {
-        const diffResult = diff(
-          actualString.split("\n"),
-          expectedString.split("\n"),
-        );
-        const diffMsg = buildMessage(diffResult).join("\n");
+        const stringDiff = (typeof actual === "string") &&
+          (typeof expected === "string");
+        const diffResult = stringDiff
+          ? diffstr(actual as string, expected as string)
+          : diff(actualString.split("\n"), expectedString.split("\n"));
+        const diffMsg = buildMessage(diffResult, { stringDiff }).join("\n");
         message = `Values are not strictly equal:\n${diffMsg}`;
       } catch {
         message = `\n${red(CAN_NOT_DISPLAY)} + \n\n`;
diff --git a/testing/asserts_test.ts b/testing/asserts_test.ts
index b2c70caa144b..4be8ae5ed3b3 100644
--- a/testing/asserts_test.ts
+++ b/testing/asserts_test.ts
@@ -927,6 +927,23 @@ Deno.test("assertEquals diff for differently ordered objects", () => {
   );
 });
 
+Deno.test("assert diff formatting (strings)", () => {
+  assertThrows(
+    () => {
+      assertEquals([..."abcd"].join("\n"), [..."abxde"].join("\n"));
+    },
+    undefined,
+    `
+    a
+    b
+${green("+   x")}
+${red("-   c")}
+    d
+${green("+   e")}
+`,
+  );
+});
+
 // Check that the diff formatter overrides some default behaviours of
 // `Deno.inspect()` which are problematic for diffing.
 Deno.test("assert diff formatting", () => {