diff --git a/runtime/doc/diff.txt b/runtime/doc/diff.txt
index d56aea7..6670f45 100644
--- a/runtime/doc/diff.txt
+++ b/runtime/doc/diff.txt
@@ -39,7 +39,9 @@
 then append the file name of the first argument to the directory name to find
 the file.
 
-This only works when a standard "diff" command is available.  See 'diffexpr'.
+By default an internal diff library will be used.  When 'diffopt' or
+'diffexpr' has been set an external "diff" command will be used.  This only
+works when such a diff program is available.
 
 Diffs are local to the current tab page |tab-page|.  You can't see diffs with
 a window in another tab page.  This does make it possible to have several
@@ -344,8 +346,9 @@
 
 The ">" is replaced with the value of 'shellredir'.
 
-The output of "diff" must be a normal "ed" style diff.  Do NOT use a context
-diff.  This example explains the format that Vim expects: >
+The output of "diff" must be a normal "ed" style diff or a unified diff.  Do
+NOT use a context diff.  This example explains the format that Vim expects for
+the "ed" style diff: >
 
 	1a2
 	> bbb
diff --git a/runtime/doc/options.txt b/runtime/doc/options.txt
index fca2e46..16aa422 100644
--- a/runtime/doc/options.txt
+++ b/runtime/doc/options.txt
@@ -2609,8 +2609,8 @@
 			{not in Vi}
 			{not available when compiled without the |+diff|
 			feature}
-	Expression which is evaluated to obtain an ed-style diff file from two
-	versions of a file.  See |diff-diffexpr|.
+	Expression which is evaluated to obtain a diff file (either ed-style
+	or unified-style) from two versions of a file.  See |diff-diffexpr|.
 	This option cannot be set from a |modeline| or in the |sandbox|, for
 	security reasons.
 
@@ -2657,11 +2657,31 @@
 		foldcolumn:{n}	Set the 'foldcolumn' option to {n} when
 				starting diff mode.  Without this 2 is used.
 
-	Examples: >
+		internal	Use the internal diff library.  This is
+				ignored when 'diffexpr' is set.  *E960*
+				When running out of memory when writing a
+				buffer this item will be ignored for diffs
+				involving that buffer.  Set the 'verbose'
+				option to see when this happens.
 
-		:set diffopt=filler,context:4
+		indent-heuristic
+                                 Use the indent heuristic for the internal
+                                 diff library.
+
+                algorithm:{text} Use the specified diff algorithm with the
+				internal diff engine. Currently supported 
+				algorithms are:
+				myers      the default algorithm
+				minimal    spend extra time to generate the
+					   smallest possible diff
+				patience   patience diff algorithm
+				histogram  histogram diff algorithm
+
+	Examples: >
+		:set diffopt=internal,filler,context:4
 		:set diffopt=
-		:set diffopt=filler,foldcolumn:3
+		:set diffopt=internal,filler,foldcolumn:3
+		:set diffopt-=internal  " do NOT use the internal diff parser
 <
 				     *'digraph'* *'dg'* *'nodigraph'* *'nodg'*
 'digraph' 'dg'		boolean	(default off)