diff --git a/diff.c b/diff.c
index 941956d8c4..03ffe467e4 100644
--- a/diff.c
+++ b/diff.c
@@ -794,9 +794,11 @@ static void moved_block_clear(struct moved_block *b)
 	memset(b, 0, sizeof(*b));
 }
 
+#define INDENT_BLANKLINE INT_MIN
+
 static void fill_es_indent_data(struct emitted_diff_symbol *es)
 {
-	unsigned int off = 0;
+	unsigned int off = 0, i;
 	int width = 0, tab_width = es->flags & WS_TAB_WIDTH_MASK;
 	const char *s = es->line;
 	const int len = es->len;
@@ -820,8 +822,18 @@ static void fill_es_indent_data(struct emitted_diff_symbol *es)
 		}
 	}
 
-	es->indent_off = off;
-	es->indent_width = width;
+	/* check if this line is blank */
+	for (i = off; i < len; i++)
+		if (!isspace(s[i]))
+		    break;
+
+	if (i == len) {
+		es->indent_width = INDENT_BLANKLINE;
+		es->indent_off = len;
+	} else {
+		es->indent_off = off;
+		es->indent_width = width;
+	}
 }
 
 static int compute_ws_delta(const struct emitted_diff_symbol *a,
@@ -836,6 +848,11 @@ static int compute_ws_delta(const struct emitted_diff_symbol *a,
 	    b_width = b->indent_width;
 	int delta;
 
+	if (a_width == INDENT_BLANKLINE && b_width == INDENT_BLANKLINE) {
+		*out = INDENT_BLANKLINE;
+		return 1;
+	}
+
 	if (a->s == DIFF_SYMBOL_PLUS)
 		delta = a_width - b_width;
 	else
@@ -879,6 +896,10 @@ static int cmp_in_block_with_wsd(const struct diff_options *o,
 	if (al != bl)
 		return 1;
 
+	/* If 'l' and 'cur' are both blank then they match. */
+	if (a_width == INDENT_BLANKLINE && c_width == INDENT_BLANKLINE)
+		return 0;
+
 	/*
 	 * The indent changes of the block are known and stored in pmb->wsd;
 	 * however we need to check if the indent changes of the current line
@@ -890,6 +911,13 @@ static int cmp_in_block_with_wsd(const struct diff_options *o,
 	else
 		delta = c_width - a_width;
 
+	/*
+	 * If the previous lines of this block were all blank then set its
+	 * whitespace delta.
+	 */
+	if (pmb->wsd == INDENT_BLANKLINE)
+		pmb->wsd = delta;
+
 	return !(delta == pmb->wsd && al - a_off == cl - c_off &&
 		 !memcmp(a, b, al) && !
 		 memcmp(a + a_off, c + c_off, al - a_off));
diff --git a/t/t4015-diff-whitespace.sh b/t/t4015-diff-whitespace.sh
index e023839ba6..9d6f88b07f 100755
--- a/t/t4015-diff-whitespace.sh
+++ b/t/t4015-diff-whitespace.sh
@@ -1901,10 +1901,20 @@ test_expect_success 'compare whitespace delta incompatible with other space opti
 	test_i18ngrep allow-indentation-change err
 '
 
+EMPTY=''
 test_expect_success 'compare mixed whitespace delta across moved blocks' '
 
 	git reset --hard &&
 	tr Q_ "\t " <<-EOF >text.txt &&
+	${EMPTY}
+	____too short without
+	${EMPTY}
+	___being grouped across blank line
+	${EMPTY}
+	context
+	lines
+	to
+	anchor
 	____Indented text to
 	_Q____be further indented by four spaces across
 	____Qseveral lines
@@ -1918,9 +1928,18 @@ test_expect_success 'compare mixed whitespace delta across moved blocks' '
 	git commit -m "add text.txt" &&
 
 	tr Q_ "\t " <<-EOF >text.txt &&
+	context
+	lines
+	to
+	anchor
 	QIndented text to
 	QQbe further indented by four spaces across
 	Q____several lines
+	${EMPTY}
+	QQtoo short without
+	${EMPTY}
+	Q_______being grouped across blank line
+	${EMPTY}
 	Q_QThese two lines have had their
 	indentation reduced by four spaces
 	QQdifferent indentation change
@@ -1937,7 +1956,16 @@ test_expect_success 'compare mixed whitespace delta across moved blocks' '
 	<BOLD>diff --git a/text.txt b/text.txt<RESET>
 	<BOLD>--- a/text.txt<RESET>
 	<BOLD>+++ b/text.txt<RESET>
-	<CYAN>@@ -1,7 +1,7 @@<RESET>
+	<CYAN>@@ -1,16 +1,16 @@<RESET>
+	<BOLD;MAGENTA>-<RESET>
+	<BOLD;MAGENTA>-<RESET><BOLD;MAGENTA>    too short without<RESET>
+	<BOLD;MAGENTA>-<RESET>
+	<BOLD;MAGENTA>-<RESET><BOLD;MAGENTA>   being grouped across blank line<RESET>
+	<BOLD;MAGENTA>-<RESET>
+	 <RESET>context<RESET>
+	 <RESET>lines<RESET>
+	 <RESET>to<RESET>
+	 <RESET>anchor<RESET>
 	<BOLD;MAGENTA>-<RESET><BOLD;MAGENTA>    Indented text to<RESET>
 	<BOLD;MAGENTA>-<RESET><BRED> <RESET>	<BOLD;MAGENTA>    be further indented by four spaces across<RESET>
 	<BOLD;MAGENTA>-<RESET><BRED>    <RESET>	<BOLD;MAGENTA>several lines<RESET>
@@ -1948,9 +1976,14 @@ test_expect_success 'compare mixed whitespace delta across moved blocks' '
 	<BOLD;CYAN>+<RESET>	<BOLD;CYAN>Indented text to<RESET>
 	<BOLD;CYAN>+<RESET>		<BOLD;CYAN>be further indented by four spaces across<RESET>
 	<BOLD;CYAN>+<RESET>	<BOLD;CYAN>    several lines<RESET>
-	<BOLD;YELLOW>+<RESET>	<BRED> <RESET>	<BOLD;YELLOW>These two lines have had their<RESET>
-	<BOLD;YELLOW>+<RESET><BOLD;YELLOW>indentation reduced by four spaces<RESET>
-	<BOLD;CYAN>+<RESET>		<BOLD;CYAN>different indentation change<RESET>
+	<BOLD;YELLOW>+<RESET>
+	<BOLD;YELLOW>+<RESET>		<BOLD;YELLOW>too short without<RESET>
+	<BOLD;YELLOW>+<RESET>
+	<BOLD;YELLOW>+<RESET>	<BOLD;YELLOW>       being grouped across blank line<RESET>
+	<BOLD;YELLOW>+<RESET>
+	<BOLD;CYAN>+<RESET>	<BRED> <RESET>	<BOLD;CYAN>These two lines have had their<RESET>
+	<BOLD;CYAN>+<RESET><BOLD;CYAN>indentation reduced by four spaces<RESET>
+	<BOLD;YELLOW>+<RESET>		<BOLD;YELLOW>different indentation change<RESET>
 	<GREEN>+<RESET><BRED>  <RESET>	<GREEN>too short<RESET>
 	EOF