Here's a quick hack that makes wdiff perceive spaces as words.
It's rather bad, and breaks in cases where on the left side line ends with spaces, while on the right side spaces are removed, i.e.:

left:
foo<spaces>\nbar
rigth:
foo\nbar

might have other bugs as well.

Main problem is that currently wdiff doesn't handle newlines. Instead it considers newlines to be spaces (since isspace('\n') returns non-0). When it skips whitespace, it skips both trailing spaces of a line, the newline ('\r\n' or '\n' - it makes no difference), and leading spaces on the next line.
With diffable spaces wdiff must interpret trailing spaces as a separate word, newline as newline (somehow), and leading spaces as another word.
So it's all rather messy right now.

(file #26427)

some space or tab differences are hidden by wdiff.

>
> Exple:
> -- Content of A.txt : --
> \begin{figure}[t]
>        \centering
>                \includegraphics[width=0.75\linewidth]{./figures/BRPC.eps}
>        \caption{Operations of BRPC for computing a path from $s$ to $t$ with
> the minimum number of hops along the sequence AS1-AS2-AS3}
> \label{fig:BRPC}
> \end{figure}
>
> -- Content of B.txt (just an additional tab in front of \label): --
> \begin{figure}[t]
>        \centering
>                \includegraphics[width=0.75\linewidth]{./figures/BRPC.eps}
>        \caption{Operations of BRPC for computing a path from $s$ to $t$ with
> the minimum number of hops along the sequence AS1-AS2-AS3}
>        \label{fig:BRPC}
> \end{figure}
>
> -- result of wdiff: --
>> wdiff -3 a.txt b.txt
>
>
> ======================================================================
>
> -- result of diff: --
>> diff a.txt b.txt
>
> 5c5
> < \label{fig:BRPC}
> ---
>>       \label{fig:BRPC}