The results are as expected. It seems deep-equal considers white
  spaces significant. Is there any way I can do deep equals comparison
  ignoring the white spaces?


The WG have had many comments on the official commentlist to teh efect
taht deep-equal is essentially useless (and has been inconsistently, and
differently, defined in every draft but the current one, as far as I can
rememeber). the problem is that in any real case people don't want a
fixed deep-equals they need to tune whetherwhite space or comments or
attribute or whatever are considered significant.

That said, you have a few choices.

a)
add xsl:strip-space elements="*" so that much of the white space in your
input is ignored

or

b)
before using deep-equal process the nodes (into a variable) with a mode
that normalizes space (ie do a modified identity trasform with a special
template matching text().

or

c)
use a collation that considers white space insignificant. (I'm not sure
what collations saxon currently offers)

or

d)
ignore deep-equal and write your own recursive function (this is likely
to be more efficient than (b) but less efficient than eitherr (a) or (c).



David

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