> I am using the XSL extension in PHP, which uses libxslt 
> (http://xmlsoft.org/XSLT/). I have tried using 
> xslt:preserve-space but 
> to no avail. I cannot seem to figure out what is causing this.
> 

xsl:preserve-space will only alter the set of element names specified to
xsl:strip-space.

I'm not familiar how PHP handles this, but a glance at this page:

http://us2.php.net/manual/en/ref.xslt.php

which includes a description of this directive:

XSLT_SABOPT_DISABLE_STRIPPING (integer)
Suppress the whitespace stripping (on data files only). 

suggests you are using sablotron and not libxslt, per this note:

http://us2.php.net/manual/en/ref.xslt.php#59398


Check your version and your configuration.


HTH,

Mike


-----------------------------------
Mike Haarman,
XSL Developer,
Internet Broadcasting Systems, Inc.