diff --git a/nbdime/args.py b/nbdime/args.py
index 93108668..6c5b17ef 100644
--- a/nbdime/args.py
+++ b/nbdime/args.py
@@ -288,6 +288,13 @@ def add_web_args(parser, default_port=8888):
         default=True,
         help="show unchanged cells by default"
     )
+    parser.add_argument(
+        '--identical-lines-margin',
+        dest='identical_lines_margin',
+        default=2,
+        type=int,
+        help="Margin for collapsing identical lines in editor; set to -1 to deactivate.",
+    )
 
 
 def add_diff_args(parser):
@@ -539,6 +546,7 @@ def args_for_server(arguments):
                 base_url='base_url',
                 hide_unchanged='hide_unchanged',
                 show_base='show_base',
+                identical_lines_margin='identical_lines_margin',
                 )
     ret = {kmap[k]: v for k, v in vars(arguments).items() if k in kmap}
     if 'persist' in arguments:
diff --git a/nbdime/tests/test_server_extension.py b/nbdime/tests/test_server_extension.py
index 664a4f06..5dc0b96d 100644
--- a/nbdime/tests/test_server_extension.py
+++ b/nbdime/tests/test_server_extension.py
@@ -77,6 +77,7 @@ def test_git_difftool(git_repo2, server_extension_app):
         "base": "git:",
         "baseUrl": "/nbdime",
         "closable": False,
+        "collapseIdentical": 2,
         "remote": "",
         "savable": False,
         "hideUnchanged": True,
diff --git a/nbdime/webapp/nbdimeserver.py b/nbdime/webapp/nbdimeserver.py
index f6c157c7..e4d98b6f 100644
--- a/nbdime/webapp/nbdimeserver.py
+++ b/nbdime/webapp/nbdimeserver.py
@@ -50,6 +50,7 @@ def base_args(self):
             'savable': fn is not None,
             'baseUrl': self.nbdime_base_url,
             'hideUnchanged': self.params.get('hide_unchanged', True),
+            'collapseIdentical': self.params.get('identical_lines_margin', 2),
         }
         if fn:
             # For reference, e.g. if user wants to download file
diff --git a/packages/nbdime/src/common/basepanel.ts b/packages/nbdime/src/common/basepanel.ts
index 17a8566f..0fe6a996 100644
--- a/packages/nbdime/src/common/basepanel.ts
+++ b/packages/nbdime/src/common/basepanel.ts
@@ -2,35 +2,37 @@
 // Distributed under the terms of the Modified BSD License.
 
 import { Panel } from '@lumino/widgets';
-import type { IDiffWidgetOptions, IMergeWidgetOptions } from './interfaces';
+import type {
+  IDiffViewOptions,
+  IDiffWidgetOptions,
+  IMergeViewOptions,
+} from './interfaces';
 import type { CodeEditor } from '@jupyterlab/codeeditor';
 
 /**
  * Common panel for diff views
  */
-export class DiffPanel<T> extends Panel {
-  constructor({ model, editorFactory }: IDiffWidgetOptions<T>) {
+export class DiffPanel<
+  T,
+  U extends IDiffViewOptions = IDiffViewOptions,
+> extends Panel {
+  constructor({
+    model,
+    editorFactory,
+    ...viewOptions
+  }: IDiffWidgetOptions<T> & U) {
     super();
     this._editorFactory = editorFactory;
     this._model = model;
+    this._viewOptions = viewOptions as U;
   }
 
   protected _editorFactory: CodeEditor.Factory | undefined;
   protected _model: T;
+  protected _viewOptions: U;
 }
 
 /**
  * Common panel for merge views
  */
-export class MergePanel<T> extends DiffPanel<T> {
-  constructor({
-    model,
-    editorFactory,
-    ...viewOptions
-  }: IDiffWidgetOptions<T> & IMergeWidgetOptions) {
-    super({ model, editorFactory });
-    this._viewOptions = viewOptions;
-  }
-
-  protected _viewOptions: IMergeWidgetOptions;
-}
+export class MergePanel<T> extends DiffPanel<T, IMergeViewOptions> {}
diff --git a/packages/nbdime/src/common/interfaces.ts b/packages/nbdime/src/common/interfaces.ts
index 7053bcd3..f1d76cb3 100644
--- a/packages/nbdime/src/common/interfaces.ts
+++ b/packages/nbdime/src/common/interfaces.ts
@@ -1,10 +1,22 @@
 import type { CodeEditor } from '@jupyterlab/codeeditor';
 import type { IRenderMimeRegistry } from '@jupyterlab/rendermime';
 
+/**
+ * Diff view options
+ */
+export interface IDiffViewOptions {
+  /**
+   * When true stretches of unchanged text will be collapsed in the text editors.
+   * When a number is given, this indicates the amount of lines to leave visible
+   * around such stretches (which defaults to 2). Defaults to true.
+   */
+  collapseIdentical?: boolean | number;
+}
+
 /**
  * Common merge view options
  */
-export interface IMergeWidgetOptions {
+export interface IMergeViewOptions extends IDiffViewOptions {
   /**
    * Whether to show the base version (4-panels) or not (3-panels).
    */
@@ -16,18 +28,28 @@ export interface IMergeWidgetOptions {
  */
 // TODO `T` should be scoped down but more API rework will be needed on the model to achieve that
 // there is definitely room to rationalize the code with more abstract or mixin classes.
-export interface IDiffWidgetOptions<T> {
+export interface IDiffWidgetOptions<T> extends IDiffViewOptions {
+  /**
+   * Diff model
+   */
   model: T;
+  /**
+   * Text editor factory
+   */
   editorFactory?: CodeEditor.Factory;
 }
 
-export interface IMimeDiffWidgetOptions<T> {
-  model: T;
+export interface IMimeDiffWidgetOptions<T> extends IDiffWidgetOptions<T> {
+  /**
+   * Rendermime registry
+   */
   rendermime: IRenderMimeRegistry;
-  editorFactory?: CodeEditor.Factory;
 }
 
 export interface ICellDiffWidgetOptions<T> extends IMimeDiffWidgetOptions<T> {
+  /**
+   * Cell mime type
+   */
   // TODO this seems redundant as mimetype is part of the model
   mimetype: string;
 }
diff --git a/packages/nbdime/src/common/mergeview.ts b/packages/nbdime/src/common/mergeview.ts
index c4548564..19575f30 100644
--- a/packages/nbdime/src/common/mergeview.ts
+++ b/packages/nbdime/src/common/mergeview.ts
@@ -44,7 +44,7 @@ import {
   createEditorFactory,
 } from './editor';
 
-import type { IMergeWidgetOptions } from './interfaces';
+import type { IMergeViewOptions } from './interfaces';
 
 import { valueIn, hasEntries, splitLines } from './util';
 
@@ -135,7 +135,7 @@ const baseTheme = EditorView.baseTheme({
     backgroundColor: 'var(--jp-layout-color2)',
     border: 'var(--jp-border-width) solid var(--jp-border-color1)',
     fontSize: '90%',
-    padding:'0 3px',
+    padding: '0 3px',
     borderRadius: '4px',
   },
 });
@@ -515,7 +515,7 @@ const CollapsedRangesField = StateField.define<DecorationSet>({
 /**
  * Merge view factory options
  */
-export interface IMergeViewOptions extends Partial<IMergeWidgetOptions> {
+export interface IMergeViewFactoryOptions extends Partial<IMergeViewOptions> {
   /**
    * Diff between the reference and a remote version
    */
@@ -538,14 +538,25 @@ export interface IMergeViewOptions extends Partial<IMergeWidgetOptions> {
 /**
  * A wrapper view for showing StringDiffModels in a MergeView
  */
-export function createNbdimeMergeView(options: IMergeViewOptions): MergeView {
-  const { remote, local, merged, readOnly, factory, showBase } = options;
+export function createNbdimeMergeView(
+  options: IMergeViewFactoryOptions,
+): MergeView {
+  const {
+    remote,
+    local,
+    merged,
+    readOnly,
+    factory,
+    collapseIdentical,
+    showBase,
+  } = options;
   let opts: IMergeViewEditorConfiguration = {
     remote,
     local,
     merged,
     config: { readOnly },
     factory: factory ?? createEditorFactory(),
+    collapseIdentical,
     showBase,
   };
 
@@ -1425,8 +1436,8 @@ export class MergeView extends Panel {
     const additionalExtensions = inMergeView
       ? [listener, mergeControlGutter, getCommonEditorExtensions(inMergeView)]
       : getCommonEditorExtensions(inMergeView);
-    if(this._collapseIdentical >= 0) {
-      additionalExtensions.push(CollapsedRangesField)
+    if (this._collapseIdentical >= 0) {
+      additionalExtensions.push(CollapsedRangesField);
     }
 
     this._base = new EditorWidget({
@@ -1608,7 +1619,6 @@ export class MergeView extends Panel {
    * Align the matching lines of the different editors
    */
   alignViews() {
-    console.log(this._showBase, this._diffViews.length);
     let lineHeight = this._showBase
       ? this._base.cm.defaultLineHeight
       : this._diffViews[0].remoteEditorWidget.cm.defaultLineHeight;
@@ -1634,8 +1644,8 @@ export class MergeView extends Panel {
     let processViewportAlignement = false;
     const viewports = editors.map(e => ({
       from: offsetToPos(e.state.doc, e.viewport.from),
-      to: offsetToPos(e.state.doc, e.viewport.to)
-    }))
+      to: offsetToPos(e.state.doc, e.viewport.to),
+    }));
 
     const addStartSpacers = () => {
       sumDeltas.forEach((delta, i) => {
@@ -1647,10 +1657,10 @@ export class MergeView extends Panel {
             widget: new PaddingWidget(delta * lineHeight),
             block: true,
             side: -1,
-          })
+          }),
         );
       });
-    }
+    };
 
     for (let alignment_ of linesToAlign) {
       let alignment = this._showBase ? alignment_.slice(0, 3) : alignment_;
@@ -1666,15 +1676,17 @@ export class MergeView extends Panel {
       let correctedDeltas = lineDeltas.map(line => line - minDelta);
 
       const afterViewport = alignment.map((a, i) => a > viewports[i].to.line);
-      if(!afterViewport.some(after => !after)) {
+      if (!afterViewport.some(after => !after)) {
         // All follow-up alignments are after the viewport => bail out
         break;
       }
 
-      const beforeViewport = alignment.map((a, i) => a < viewports[i].from.line)
+      const beforeViewport = alignment.map(
+        (a, i) => a < viewports[i].from.line,
+      );
 
-      if (beforeViewport.some(before => !before)){
-        if(!processViewportAlignement) {
+      if (beforeViewport.some(before => !before)) {
+        if (!processViewportAlignement) {
           // First time we add spacer in the viewport => add initial spacers
           addStartSpacers();
         }
@@ -1707,13 +1719,15 @@ export class MergeView extends Panel {
           }
         });
       } else {
-        correctedDeltas.forEach((delta, i) => { sumDeltas[i] += delta; });
-      }  
+        correctedDeltas.forEach((delta, i) => {
+          sumDeltas[i] += delta;
+        });
+      }
     }
 
-    if(!processViewportAlignement) {
+    if (!processViewportAlignement) {
       // There are no spacer in the viewport, we still have to add top spacer
-      addStartSpacers()
+      addStartSpacers();
     }
 
     // Padding at the last line of the editor
diff --git a/packages/nbdime/src/diff/widget/cell.ts b/packages/nbdime/src/diff/widget/cell.ts
index bf33ad34..3cfef585 100644
--- a/packages/nbdime/src/diff/widget/cell.ts
+++ b/packages/nbdime/src/diff/widget/cell.ts
@@ -105,6 +105,7 @@ export class CellDiffWidget extends DiffPanel<CellDiffModel> {
       editorClasses: CURR_DIFF_CLASSES,
       rendermime: this._rendermime,
       editorFactory: this._editorFactory,
+      ...this._viewOptions,
     });
     sourceView.addClass(SOURCE_ROW_CLASS);
     if (model.executionCount) {
@@ -122,6 +123,7 @@ export class CellDiffWidget extends DiffPanel<CellDiffModel> {
         editorClasses: CURR_DIFF_CLASSES,
         rendermime: this._rendermime,
         editorFactory: this._editorFactory,
+        ...this._viewOptions,
       });
       metadataView.addClass(METADATA_ROW_CLASS);
       this.addWidget(metadataView);
@@ -140,6 +142,7 @@ export class CellDiffWidget extends DiffPanel<CellDiffModel> {
             editorClasses: CURR_DIFF_CLASSES,
             rendermime: this._rendermime,
             editorFactory: this._editorFactory,
+            ...this._viewOptions,
           });
           container.addWidget(outputsWidget);
           changed = changed || !o.unchanged || o.added || o.deleted;
@@ -159,6 +162,7 @@ export class CellDiffWidget extends DiffPanel<CellDiffModel> {
               editorClasses: CURR_DIFF_CLASSES,
               rendermime: this._rendermime,
               editorFactory: this._editorFactory,
+              ...this._viewOptions,
             });
             target.addWidget(outputsWidget);
             changed = changed || !o.unchanged || o.added || o.deleted;
@@ -217,6 +221,7 @@ export class CellDiffWidget extends DiffPanel<CellDiffModel> {
     editorClasses,
     rendermime,
     editorFactory,
+    ...viewOptions
   }: ICellDiffViewOptions): Panel {
     let view: Panel;
     if (model instanceof StringDiffModel) {
@@ -236,6 +241,7 @@ export class CellDiffWidget extends DiffPanel<CellDiffModel> {
         inner = createNbdimeMergeView({
           remote: model,
           factory: editorFactory,
+          ...viewOptions,
         });
       }
       if (model.collapsible) {
diff --git a/packages/nbdime/src/diff/widget/metadata.ts b/packages/nbdime/src/diff/widget/metadata.ts
index 57e7874d..cfacf5fe 100644
--- a/packages/nbdime/src/diff/widget/metadata.ts
+++ b/packages/nbdime/src/diff/widget/metadata.ts
@@ -22,7 +22,6 @@ const ROOT_METADATA_CLASS = 'jp-Metadata-diff';
  * MetadataWidget for changes to Notebook-level metadata
  */
 export class MetadataDiffWidget extends DiffPanel<IStringDiffModel> {
-  // TODO improve typing hierarchy to avoid `Omit`
   constructor(options: IDiffWidgetOptions<IStringDiffModel>) {
     super(options);
     console.assert(!this._model.added && !this._model.deleted);
@@ -37,6 +36,7 @@ export class MetadataDiffWidget extends DiffPanel<IStringDiffModel> {
       let view: Widget = createNbdimeMergeView({
         remote: model,
         factory: this._editorFactory,
+        ...this._viewOptions,
       });
       if (model.collapsible) {
         view = new CollapsiblePanel(
diff --git a/packages/nbdime/src/diff/widget/notebook.ts b/packages/nbdime/src/diff/widget/notebook.ts
index c3f1d328..42098351 100644
--- a/packages/nbdime/src/diff/widget/notebook.ts
+++ b/packages/nbdime/src/diff/widget/notebook.ts
@@ -53,6 +53,7 @@ export class NotebookDiffWidget extends DiffPanel<NotebookDiffModel> {
           new MetadataDiffWidget({
             model: model.metadata,
             editorFactory: this._editorFactory,
+            ...this._viewOptions,
           }),
         );
       }
@@ -67,6 +68,7 @@ export class NotebookDiffWidget extends DiffPanel<NotebookDiffModel> {
                 rendermime,
                 mimetype: model.mimetype,
                 editorFactory: this._editorFactory,
+                ...this._viewOptions,
               }),
             );
           } else {
@@ -84,6 +86,7 @@ export class NotebookDiffWidget extends DiffPanel<NotebookDiffModel> {
                   rendermime,
                   mimetype: model.mimetype,
                   editorFactory: this._editorFactory,
+                  ...this._viewOptions,
                 }),
               );
             }
diff --git a/packages/nbdime/src/diff/widget/output.ts b/packages/nbdime/src/diff/widget/output.ts
index 4cc52090..aed8fb90 100644
--- a/packages/nbdime/src/diff/widget/output.ts
+++ b/packages/nbdime/src/diff/widget/output.ts
@@ -233,6 +233,7 @@ export class OutputPanel extends DiffPanel<OutputDiffModel> {
         view = createNbdimeMergeView({
           remote: stringModel,
           factory: this._editorFactory,
+          ...this._viewOptions,
         });
       }
     }
@@ -241,6 +242,7 @@ export class OutputPanel extends DiffPanel<OutputDiffModel> {
       view = createNbdimeMergeView({
         remote: model.stringify(),
         factory: this._editorFactory,
+        ...this._viewOptions,
       });
     }
     return view;
diff --git a/packages/nbdime/src/merge/widget/cell.ts b/packages/nbdime/src/merge/widget/cell.ts
index 45a9c5f2..5eeb4f42 100644
--- a/packages/nbdime/src/merge/widget/cell.ts
+++ b/packages/nbdime/src/merge/widget/cell.ts
@@ -18,7 +18,7 @@ import { DragPanel } from '../../common/dragpanel';
 
 import type {
   ICellDiffWidgetOptions,
-  IMergeWidgetOptions,
+  IMergeViewOptions,
 } from '../../common/interfaces';
 
 import { createNbdimeMergeView, MergeView } from '../../common/mergeview';
@@ -87,7 +87,7 @@ export class CellMergeWidget extends MergePanel<CellMergeModel> {
     merged,
     readOnly,
     ...others
-  }: ICellMergeViewOptions & IMergeWidgetOptions): Widget | null {
+  }: ICellMergeViewOptions & IMergeViewOptions): Widget | null {
     let view: Widget | null = null;
     if (merged instanceof StringDiffModel) {
       view = createNbdimeMergeView({
diff --git a/packages/nbdime/src/merge/widget/metadata.ts b/packages/nbdime/src/merge/widget/metadata.ts
index 8f857d4f..6503c8d6 100644
--- a/packages/nbdime/src/merge/widget/metadata.ts
+++ b/packages/nbdime/src/merge/widget/metadata.ts
@@ -6,7 +6,7 @@ import type * as nbformat from '@jupyterlab/nbformat';
 
 import type {
   IDiffWidgetOptions,
-  IMergeWidgetOptions,
+  IMergeViewOptions,
 } from '../../common/interfaces';
 
 import { createNbdimeMergeView, MergeView } from '../../common/mergeview';
@@ -24,7 +24,7 @@ const ROOT_METADATA_CLASS = 'jp-Metadata-diff';
  */
 export class MetadataMergeWidget extends MergePanel<MetadataMergeModel> {
   constructor(
-    options: IDiffWidgetOptions<MetadataMergeModel> & IMergeWidgetOptions,
+    options: IDiffWidgetOptions<MetadataMergeModel> & IMergeViewOptions,
   ) {
     super(options);
     this.addClass(ROOT_METADATA_CLASS);
diff --git a/packages/nbdime/src/merge/widget/notebook.ts b/packages/nbdime/src/merge/widget/notebook.ts
index f8d5a789..586c7cbe 100644
--- a/packages/nbdime/src/merge/widget/notebook.ts
+++ b/packages/nbdime/src/merge/widget/notebook.ts
@@ -9,7 +9,7 @@ import type { IRenderMimeRegistry } from '@jupyterlab/rendermime';
 import { MergePanel } from '../../common/basepanel';
 
 import type {
-  IMergeWidgetOptions,
+  IMergeViewOptions,
   IMimeDiffWidgetOptions,
 } from '../../common/interfaces';
 
@@ -37,7 +37,7 @@ export class NotebookMergeWidget extends MergePanel<NotebookMergeModel> {
   constructor({
     rendermime,
     ...options
-  }: IMimeDiffWidgetOptions<NotebookMergeModel> & IMergeWidgetOptions) {
+  }: IMimeDiffWidgetOptions<NotebookMergeModel> & IMergeViewOptions) {
     super(options);
     this._rendermime = rendermime;
 
diff --git a/packages/webapp/src/app/diff.ts b/packages/webapp/src/app/diff.ts
index 00221d0d..773f6a43 100644
--- a/packages/webapp/src/app/diff.ts
+++ b/packages/webapp/src/app/diff.ts
@@ -68,12 +68,14 @@ function showDiff(data: {
     sanitizer: new Sanitizer(),
     latexTypesetter: new MathJaxTypesetter(),
   });
+  const collapseIdentical = getConfigOption('collapseIdentical', 2);
 
   let nbdModel = new NotebookDiffModel(data.base, data.diff);
   let nbdWidget = new NotebookDiffWidget({
     model: nbdModel,
     rendermime,
     editorFactory: createEditorFactory(),
+    collapseIdentical,
   });
 
   let root = document.getElementById('nbdime-root');
diff --git a/packages/webapp/src/app/merge.ts b/packages/webapp/src/app/merge.ts
index 727d268c..4e308558 100644
--- a/packages/webapp/src/app/merge.ts
+++ b/packages/webapp/src/app/merge.ts
@@ -54,6 +54,7 @@ function showMerge(data: {
     sanitizer: new Sanitizer(),
   });
 
+  const collapseIdentical = getConfigOption('collapseIdentical', 2);
   const showBase = getConfigOption('showBase', true);
 
   if (!showBase) {
@@ -65,6 +66,7 @@ function showMerge(data: {
     model: nbmModel,
     rendermime,
     editorFactory: createEditorFactory(),
+    collapseIdentical,
     showBase,
   });
 
diff --git a/ui-tests/tests/nbdime-diff-test4.spec.ts b/ui-tests/tests/nbdime-diff-test4.spec.ts
index 1593e6c9..b1e65e89 100644
--- a/ui-tests/tests/nbdime-diff-test4.spec.ts
+++ b/ui-tests/tests/nbdime-diff-test4.spec.ts
@@ -1,16 +1,32 @@
 import { expect, test } from '@playwright/test';
 
-test.beforeEach(async ({ page }) => {
-  await page.goto('http://localhost:41000/diff');
-  await page.locator('#diff-remote').fill('data/diff_test4/left.ipynb');
-  await page.locator('#diff-base').fill('data/diff_test4/center.ipynb');
-  await page.getByRole('button', { name: 'Diff files' }).click();
-});
-
 /* Very long cell */
 test.describe('diff test4', () => {
   test('The file ends must be aligned', async ({ page }) => {
-    await page.locator('.nbdime-spinner').waitFor({state: 'hidden'});
+    const ctxt = page.context();
+    page.route(/.+\/diff/, async (route, request) => {
+      const response = await ctxt.request.fetch(request);
+      if (!response.ok()) {
+        route.abort();
+        return;
+      }
+
+      const buffer = await response!.body();
+      const content = buffer.toString();
+      route.fulfill({
+        body: content.replace(
+          '"collapseIdentical": 2',
+          '"collapseIdentical": -1',
+        ),
+      });
+    });
+
+    await page.goto('http://localhost:41000/diff');
+    await page.locator('#diff-remote').fill('data/diff_test4/left.ipynb');
+    await page.locator('#diff-base').fill('data/diff_test4/center.ipynb');
+    await page.getByRole('button', { name: 'Diff files' }).click();
+
+    await page.locator('.nbdime-spinner').waitFor({ state: 'hidden' });
     await page.waitForTimeout(300);
     await page.keyboard.press('Control+End');
     await page.waitForTimeout(300);