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[news.eclipse.newcomer] Compare files: whitespace not ignored?

Version: 3.1.0
Build id: I20050627-1435
Windows 2000
I am comparing two java source code files with mostly white space (formatting) changes. I set "Ignore white space" in preferences but the editor still traverses all the white space changes between the two files. Have I misunderstood how this feature works or is this a bug?