Whitespace
If it is important to you to keep the whitespace inside an xsl:text element, set the xml:space attribute value to preserve:
<xsl:text xml:space="preserve">
The spaces in this t e x t
will n o t be removed.
</xsl:text>
If, on the other hand, you know there is whitespace inside an element that is simply "noise" you can remove it automatically by declaring xml:space="strip".
At a higher level, to affect all the elements of a particular type, you can also include separate instructions in the XSL style sheet:
<xsl:strip-space element="para">
<xsl:preserve-space element="code">