Use colordiff wherever you would normally use diff, or pipe output to colordiff. For example:
colordiff file1 file2 diff -u file1 file2 | colordiff
If you have wdiff installed, colordiff will correctly colourise the added and removed text, provided that the -n option is given to wdiff:
wdiff -n file1 file2 | colordiffRead full blog post: "diff Command: Colorize Output On The Unix / Linux Command Line"