diff --git a/packages/compiler-cli/src/codegen.ts b/packages/compiler-cli/src/codegen.ts
index 6ea5a6aae4..e65ca3706e 100644
--- a/packages/compiler-cli/src/codegen.ts
+++ b/packages/compiler-cli/src/codegen.ts
@@ -104,6 +104,7 @@ export class CodeGenerator {
       locale: cliOptions.locale, missingTranslation,
       enableLegacyTemplate: options.enableLegacyTemplate !== false,
       enableSummariesForJit: options.enableSummariesForJit !== false,
+      preserveWhitespaces: options.preserveWhitespaces,
     });
     return new CodeGenerator(options, program, tsCompilerHost, aotCompiler, ngCompilerHost);
   }
diff --git a/packages/compiler-cli/src/transformers/api.ts b/packages/compiler-cli/src/transformers/api.ts
index ea0919c3b5..efcdabede6 100644
--- a/packages/compiler-cli/src/transformers/api.ts
+++ b/packages/compiler-cli/src/transformers/api.ts
@@ -91,6 +91,10 @@ export interface CompilerOptions extends ts.CompilerOptions {
 
   // Whether to enable support for <template> and the template attribute (true by default)
   enableLegacyTemplate?: boolean;
+
+  // Whether to remove blank text nodes from compiled templates. It is `true` by default
+  // in Angular 4 and will be re-visited post Angular 5.
+  preserveWhitespaces?: boolean;
 }
 
 export interface ModuleFilenameResolver {
diff --git a/packages/compiler-cli/src/transformers/program.ts b/packages/compiler-cli/src/transformers/program.ts
index cdf38591c0..c8dc9bff7d 100644
--- a/packages/compiler-cli/src/transformers/program.ts
+++ b/packages/compiler-cli/src/transformers/program.ts
@@ -388,4 +388,4 @@ function createProgramWithStubsHost(
     fileExists = (fileName: string) =>
         this.generatedFiles.has(fileName) || originalHost.fileExists(fileName);
   };
-}
\ No newline at end of file
+}
diff --git a/packages/compiler/src/aot/compiler.ts b/packages/compiler/src/aot/compiler.ts
index 14bbea9df3..e6ae95785a 100644
--- a/packages/compiler/src/aot/compiler.ts
+++ b/packages/compiler/src/aot/compiler.ts
@@ -323,9 +323,10 @@ export class AotCompiler {
     const pipes = ngModule.transitiveModule.pipes.map(
         pipe => this._metadataResolver.getPipeSummary(pipe.reference));
 
+    const preserveWhitespaces = compMeta !.template !.preserveWhitespaces;
     const {template: parsedTemplate, pipes: usedPipes} = this._templateParser.parse(
         compMeta, compMeta.template !.template !, directives, pipes, ngModule.schemas,
-        templateSourceUrl(ngModule.type, compMeta, compMeta.template !));
+        templateSourceUrl(ngModule.type, compMeta, compMeta.template !), preserveWhitespaces);
     const stylesExpr = componentStyles ? o.variable(componentStyles.stylesVar) : o.literalArr([]);
     const viewResult = this._viewCompiler.compileComponent(
         outputCtx, compMeta, parsedTemplate, stylesExpr, usedPipes);
diff --git a/packages/compiler/src/aot/compiler_factory.ts b/packages/compiler/src/aot/compiler_factory.ts
index 7d911e4c81..cbdbc806ec 100644
--- a/packages/compiler/src/aot/compiler_factory.ts
+++ b/packages/compiler/src/aot/compiler_factory.ts
@@ -54,6 +54,7 @@ export function createAotCompiler(compilerHost: AotCompilerHost, options: AotCom
     useJit: false,
     enableLegacyTemplate: options.enableLegacyTemplate !== false,
     missingTranslation: options.missingTranslation,
+    preserveWhitespaces: options.preserveWhitespaces,
   });
   const normalizer = new DirectiveNormalizer(
       {get: (url: string) => compilerHost.loadResource(url)}, urlResolver, htmlParser, config);
diff --git a/packages/compiler/src/aot/compiler_options.ts b/packages/compiler/src/aot/compiler_options.ts
index ed260b3a6a..063c4d137b 100644
--- a/packages/compiler/src/aot/compiler_options.ts
+++ b/packages/compiler/src/aot/compiler_options.ts
@@ -15,4 +15,5 @@ export interface AotCompilerOptions {
   missingTranslation?: MissingTranslationStrategy;
   enableLegacyTemplate?: boolean;
   enableSummariesForJit?: boolean;
+  preserveWhitespaces?: boolean;
 }
diff --git a/packages/compiler/src/compile_metadata.ts b/packages/compiler/src/compile_metadata.ts
index 8d2b5c4f1e..9c62149604 100644
--- a/packages/compiler/src/compile_metadata.ts
+++ b/packages/compiler/src/compile_metadata.ts
@@ -252,8 +252,9 @@ export class CompileTemplateMetadata {
   animations: any[];
   ngContentSelectors: string[];
   interpolation: [string, string]|null;
+  preserveWhitespaces: boolean;
   constructor({encapsulation, template, templateUrl, styles, styleUrls, externalStylesheets,
-               animations, ngContentSelectors, interpolation, isInline}: {
+               animations, ngContentSelectors, interpolation, isInline, preserveWhitespaces}: {
     encapsulation: ViewEncapsulation | null,
     template: string|null,
     templateUrl: string|null,
@@ -263,7 +264,8 @@ export class CompileTemplateMetadata {
     ngContentSelectors: string[],
     animations: any[],
     interpolation: [string, string]|null,
-    isInline: boolean
+    isInline: boolean,
+    preserveWhitespaces: boolean
   }) {
     this.encapsulation = encapsulation;
     this.template = template;
@@ -278,6 +280,7 @@ export class CompileTemplateMetadata {
     }
     this.interpolation = interpolation;
     this.isInline = isInline;
+    this.preserveWhitespaces = preserveWhitespaces;
   }
 
   toSummary(): CompileTemplateSummary {
@@ -516,7 +519,8 @@ export function createHostComponentMeta(
       animations: [],
       isInline: true,
       externalStylesheets: [],
-      interpolation: null
+      interpolation: null,
+      preserveWhitespaces: false,
     }),
     exportAs: null,
     changeDetection: ChangeDetectionStrategy.Default,
diff --git a/packages/compiler/src/compiler.ts b/packages/compiler/src/compiler.ts
index 8a88d720b9..f3f9fa87d8 100644
--- a/packages/compiler/src/compiler.ts
+++ b/packages/compiler/src/compiler.ts
@@ -24,7 +24,7 @@
 export {VERSION} from './version';
 export * from './template_parser/template_ast';
 export {TEMPLATE_TRANSFORMS} from './template_parser/template_parser';
-export {CompilerConfig} from './config';
+export {CompilerConfig, preserveWhitespacesDefault} from './config';
 export * from './compile_metadata';
 export * from './aot/compiler_factory';
 export * from './aot/compiler';
diff --git a/packages/compiler/src/config.ts b/packages/compiler/src/config.ts
index 75be193731..8ab10926e5 100644
--- a/packages/compiler/src/config.ts
+++ b/packages/compiler/src/config.ts
@@ -6,11 +6,8 @@
  * found in the LICENSE file at https://angular.io/license
  */
 
-import {InjectionToken, MissingTranslationStrategy, ViewEncapsulation, isDevMode} from '@angular/core';
-
-import {CompileIdentifierMetadata} from './compile_metadata';
-import {Identifiers} from './identifiers';
-
+import {MissingTranslationStrategy, ViewEncapsulation} from '@angular/core';
+import {noUndefined} from './util';
 
 export class CompilerConfig {
   public defaultEncapsulation: ViewEncapsulation|null;
@@ -19,18 +16,26 @@ export class CompilerConfig {
   public enableLegacyTemplate: boolean;
   public useJit: boolean;
   public missingTranslation: MissingTranslationStrategy|null;
+  public preserveWhitespaces: boolean;
 
   constructor(
       {defaultEncapsulation = ViewEncapsulation.Emulated, useJit = true, missingTranslation,
-       enableLegacyTemplate}: {
+       enableLegacyTemplate, preserveWhitespaces}: {
         defaultEncapsulation?: ViewEncapsulation,
         useJit?: boolean,
         missingTranslation?: MissingTranslationStrategy,
         enableLegacyTemplate?: boolean,
+        preserveWhitespaces?: boolean
       } = {}) {
     this.defaultEncapsulation = defaultEncapsulation;
     this.useJit = !!useJit;
     this.missingTranslation = missingTranslation || null;
     this.enableLegacyTemplate = enableLegacyTemplate !== false;
+    this.preserveWhitespaces = preserveWhitespacesDefault(noUndefined(preserveWhitespaces));
   }
 }
+
+export function preserveWhitespacesDefault(
+    preserveWhitespacesOption: boolean | null, defaultSetting = true): boolean {
+  return preserveWhitespacesOption === null ? defaultSetting : preserveWhitespacesOption;
+}
diff --git a/packages/compiler/src/directive_normalizer.ts b/packages/compiler/src/directive_normalizer.ts
index e9484a34ae..299263feeb 100644
--- a/packages/compiler/src/directive_normalizer.ts
+++ b/packages/compiler/src/directive_normalizer.ts
@@ -9,7 +9,7 @@
 import {ViewEncapsulation, ɵstringify as stringify} from '@angular/core';
 
 import {CompileAnimationEntryMetadata, CompileDirectiveMetadata, CompileStylesheetMetadata, CompileTemplateMetadata, templateSourceUrl} from './compile_metadata';
-import {CompilerConfig} from './config';
+import {CompilerConfig, preserveWhitespacesDefault} from './config';
 import {CompilerInjectable} from './injectable';
 import * as html from './ml_parser/ast';
 import {HtmlParser} from './ml_parser/html_parser';
@@ -31,6 +31,7 @@ export interface PrenormalizedTemplateMetadata {
   interpolation: [string, string]|null;
   encapsulation: ViewEncapsulation|null;
   animations: CompileAnimationEntryMetadata[];
+  preserveWhitespaces: boolean|null;
 }
 
 @CompilerInjectable()
@@ -82,6 +83,13 @@ export class DirectiveNormalizer {
       throw syntaxError(
           `No template specified for component ${stringify(prenormData.componentType)}`);
     }
+
+    if (isDefined(prenormData.preserveWhitespaces) &&
+        typeof prenormData.preserveWhitespaces !== 'boolean') {
+      throw syntaxError(
+          `The preserveWhitespaces option for component ${stringify(prenormData.componentType)} must be a boolean`);
+    }
+
     return SyncAsync.then(
         this.normalizeTemplateOnly(prenormData),
         (result: CompileTemplateMetadata) => this.normalizeExternalStylesheets(result));
@@ -149,7 +157,9 @@ export class DirectiveNormalizer {
       ngContentSelectors: visitor.ngContentSelectors,
       animations: prenormData.animations,
       interpolation: prenormData.interpolation, isInline,
-      externalStylesheets: []
+      externalStylesheets: [],
+      preserveWhitespaces: preserveWhitespacesDefault(
+          prenormData.preserveWhitespaces, this._config.preserveWhitespaces),
     });
   }
 
@@ -168,6 +178,7 @@ export class DirectiveNormalizer {
           animations: templateMeta.animations,
           interpolation: templateMeta.interpolation,
           isInline: templateMeta.isInline,
+          preserveWhitespaces: templateMeta.preserveWhitespaces,
         }));
   }
 
diff --git a/packages/compiler/src/directive_resolver.ts b/packages/compiler/src/directive_resolver.ts
index 2b1790305f..599dc26678 100644
--- a/packages/compiler/src/directive_resolver.ts
+++ b/packages/compiler/src/directive_resolver.ts
@@ -152,7 +152,8 @@ export class DirectiveResolver {
         styleUrls: directive.styleUrls,
         encapsulation: directive.encapsulation,
         animations: directive.animations,
-        interpolation: directive.interpolation
+        interpolation: directive.interpolation,
+        preserveWhitespaces: directive.preserveWhitespaces,
       });
     } else {
       return new Directive({
diff --git a/packages/compiler/src/jit/compiler.ts b/packages/compiler/src/jit/compiler.ts
index 7cf3a447b3..4a3fbf9430 100644
--- a/packages/compiler/src/jit/compiler.ts
+++ b/packages/compiler/src/jit/compiler.ts
@@ -262,6 +262,7 @@ export class JitCompiler implements Compiler {
     const externalStylesheetsByModuleUrl = new Map<string, CompiledStylesheet>();
     const outputContext = createOutputContext();
     const componentStylesheet = this._styleCompiler.compileComponent(outputContext, compMeta);
+    const preserveWhitespaces = compMeta !.template !.preserveWhitespaces;
     compMeta.template !.externalStylesheets.forEach((stylesheetMeta) => {
       const compiledStylesheet =
           this._styleCompiler.compileStyles(createOutputContext(), compMeta, stylesheetMeta);
@@ -274,7 +275,8 @@ export class JitCompiler implements Compiler {
         pipe => this._metadataResolver.getPipeSummary(pipe.reference));
     const {template: parsedTemplate, pipes: usedPipes} = this._templateParser.parse(
         compMeta, compMeta.template !.template !, directives, pipes, template.ngModule.schemas,
-        templateSourceUrl(template.ngModule.type, template.compMeta, template.compMeta.template !));
+        templateSourceUrl(template.ngModule.type, template.compMeta, template.compMeta.template !),
+        preserveWhitespaces);
     const compileResult = this._viewCompiler.compileComponent(
         outputContext, compMeta, parsedTemplate, ir.variable(componentStylesheet.stylesVar),
         usedPipes);
diff --git a/packages/compiler/src/jit/compiler_factory.ts b/packages/compiler/src/jit/compiler_factory.ts
index fc2458ea0d..4966036eca 100644
--- a/packages/compiler/src/jit/compiler_factory.ts
+++ b/packages/compiler/src/jit/compiler_factory.ts
@@ -106,6 +106,7 @@ export class JitCompilerFactory implements CompilerFactory {
       defaultEncapsulation: ViewEncapsulation.Emulated,
       missingTranslation: MissingTranslationStrategy.Warning,
       enableLegacyTemplate: true,
+      preserveWhitespaces: true,
     };
 
     this._defaultOptions = [compilerOptions, ...defaultOptions];
@@ -125,6 +126,7 @@ export class JitCompilerFactory implements CompilerFactory {
             defaultEncapsulation: opts.defaultEncapsulation,
             missingTranslation: opts.missingTranslation,
             enableLegacyTemplate: opts.enableLegacyTemplate,
+            preserveWhitespaces: opts.preserveWhitespaces,
           });
         },
         deps: []
@@ -152,6 +154,7 @@ function _mergeOptions(optionsArr: CompilerOptions[]): CompilerOptions {
     providers: _mergeArrays(optionsArr.map(options => options.providers !)),
     missingTranslation: _lastDefined(optionsArr.map(options => options.missingTranslation)),
     enableLegacyTemplate: _lastDefined(optionsArr.map(options => options.enableLegacyTemplate)),
+    preserveWhitespaces: _lastDefined(optionsArr.map(options => options.preserveWhitespaces)),
   };
 }
 
diff --git a/packages/compiler/src/metadata_resolver.ts b/packages/compiler/src/metadata_resolver.ts
index 5efad1d1d5..5a1a9e3f25 100644
--- a/packages/compiler/src/metadata_resolver.ts
+++ b/packages/compiler/src/metadata_resolver.ts
@@ -219,7 +219,8 @@ export class CompileMetadataResolver {
         styles: template.styles,
         styleUrls: template.styleUrls,
         animations: template.animations,
-        interpolation: template.interpolation
+        interpolation: template.interpolation,
+        preserveWhitespaces: template.preserveWhitespaces
       });
       if (isPromise(templateMeta) && isSync) {
         this._reportError(componentStillLoadingError(directiveType), directiveType);
@@ -267,7 +268,8 @@ export class CompileMetadataResolver {
         interpolation: noUndefined(dirMeta.interpolation),
         isInline: !!dirMeta.template,
         externalStylesheets: [],
-        ngContentSelectors: []
+        ngContentSelectors: [],
+        preserveWhitespaces: noUndefined(dirMeta.preserveWhitespaces),
       });
     }
 
diff --git a/packages/compiler/src/ml_parser/html_whitespaces.ts b/packages/compiler/src/ml_parser/html_whitespaces.ts
new file mode 100644
index 0000000000..1adef46418
--- /dev/null
+++ b/packages/compiler/src/ml_parser/html_whitespaces.ts
@@ -0,0 +1,86 @@
+/**
+ * @license
+ * Copyright Google Inc. All Rights Reserved.
+ *
+ * Use of this source code is governed by an MIT-style license that can be
+ * found in the LICENSE file at https://angular.io/license
+ */
+
+import * as html from './ast';
+import {ParseTreeResult} from './parser';
+import {NGSP_UNICODE} from './tags';
+
+export const PRESERVE_WS_ATTR_NAME = 'ngPreserveWhitespaces';
+
+const SKIP_WS_TRIM_TAGS = new Set(['pre', 'template', 'textarea', 'script', 'style']);
+
+function hasPreserveWhitespacesAttr(attrs: html.Attribute[]): boolean {
+  return attrs.some((attr: html.Attribute) => attr.name === PRESERVE_WS_ATTR_NAME);
+}
+
+/**
+ * Angular Dart introduced &ngsp; as a placeholder for non-removable space, see:
+ * https://github.com/dart-lang/angular/blob/0bb611387d29d65b5af7f9d2515ab571fd3fbee4/_tests/test/compiler/preserve_whitespace_test.dart#L25-L32
+ * In Angular Dart &ngsp; is converted to the 0xE500 PUA (Private Use Areas) unicode character
+ * and later on replaced by a space. We are re-implementing the same idea here.
+ */
+export function replaceNgsp(value: string): string {
+  // lexer is replacing the &ngsp; pseudo-entity with NGSP_UNICODE
+  return value.replace(new RegExp(NGSP_UNICODE, 'g'), ' ');
+}
+
+/**
+ * This visitor can walk HTML parse tree and remove / trim text nodes using the following rules:
+ * - consider spaces, tabs and new lines as whitespace characters;
+ * - drop text nodes consisting of whitespace characters only;
+ * - for all other text nodes replace consecutive whitespace characters with one space;
+ * - convert &ngsp; pseudo-entity to a single space;
+ *
+ * Removal and trimming of whitespaces have positive performance impact (less code to generate
+ * while compiling templates, faster view creation). At the same time it can be "destructive"
+ * in some cases (whitespaces can influence layout). Because of the potential of breaking layout
+ * this visitor is not activated by default in Angular 4 and people need to explicitly opt-in for
+ * whitespace removal. The default option for whitespace removal will be revisited post Angular 5
+ * and might be changed to "on" by default.
+ */
+class WhitespaceVisitor implements html.Visitor {
+  visitElement(element: html.Element, context: any): any {
+    if (SKIP_WS_TRIM_TAGS.has(element.name) || hasPreserveWhitespacesAttr(element.attrs)) {
+      // don't descent into elements where we need to preserve whitespaces
+      // but still visit all attributes to eliminate one used as a market to preserve WS
+      return new html.Element(
+          element.name, html.visitAll(this, element.attrs), element.children, element.sourceSpan,
+          element.startSourceSpan, element.endSourceSpan);
+    }
+
+    return new html.Element(
+        element.name, element.attrs, html.visitAll(this, element.children), element.sourceSpan,
+        element.startSourceSpan, element.endSourceSpan);
+  }
+
+  visitAttribute(attribute: html.Attribute, context: any): any {
+    return attribute.name !== PRESERVE_WS_ATTR_NAME ? attribute : null;
+  }
+
+  visitText(text: html.Text, context: any): any {
+    const isBlank = text.value.trim().length === 0;
+
+    if (!isBlank) {
+      return new html.Text(replaceNgsp(text.value).replace(/\s\s+/g, ' '), text.sourceSpan);
+    }
+
+    return null;
+  }
+
+  visitComment(comment: html.Comment, context: any): any { return comment; }
+
+  visitExpansion(expansion: html.Expansion, context: any): any { return expansion; }
+
+  visitExpansionCase(expansionCase: html.ExpansionCase, context: any): any { return expansionCase; }
+}
+
+export function removeWhitespaces(htmlAstWithErrors: ParseTreeResult): ParseTreeResult {
+  return new ParseTreeResult(
+      html.visitAll(new WhitespaceVisitor(), htmlAstWithErrors.rootNodes),
+      htmlAstWithErrors.errors);
+}
diff --git a/packages/compiler/src/ml_parser/tags.ts b/packages/compiler/src/ml_parser/tags.ts
index 5f06c3fd25..8fb6580d7c 100644
--- a/packages/compiler/src/ml_parser/tags.ts
+++ b/packages/compiler/src/ml_parser/tags.ts
@@ -71,6 +71,7 @@ export function mergeNsAndName(prefix: string, localName: string): string {
 // This list is not exhaustive to keep the compiler footprint low.
 // The `&#123;` / `&#x1ab;` syntax should be used when the named character reference does not
 // exist.
+
 export const NAMED_ENTITIES: {[k: string]: string} = {
   'Aacute': '\u00C1',
   'aacute': '\u00E1',
@@ -325,3 +326,9 @@ export const NAMED_ENTITIES: {[k: string]: string} = {
   'zwj': '\u200D',
   'zwnj': '\u200C',
 };
+
+// The &ngsp; pseudo-entity is denoting a space. see:
+// https://github.com/dart-lang/angular/blob/0bb611387d29d65b5af7f9d2515ab571fd3fbee4/_tests/test/compiler/preserve_whitespace_test.dart
+export const NGSP_UNICODE = '\uE500';
+
+NAMED_ENTITIES['ngsp'] = NGSP_UNICODE;
diff --git a/packages/compiler/src/template_parser/template_parser.ts b/packages/compiler/src/template_parser/template_parser.ts
index 892f77bf54..6653693488 100644
--- a/packages/compiler/src/template_parser/template_parser.ts
+++ b/packages/compiler/src/template_parser/template_parser.ts
@@ -18,6 +18,7 @@ import {Identifiers, createTokenForExternalReference, createTokenForReference} f
 import {CompilerInjectable} from '../injectable';
 import * as html from '../ml_parser/ast';
 import {ParseTreeResult} from '../ml_parser/html_parser';
+import {removeWhitespaces, replaceNgsp} from '../ml_parser/html_whitespaces';
 import {expandNodes} from '../ml_parser/icu_ast_expander';
 import {InterpolationConfig} from '../ml_parser/interpolation_config';
 import {isNgTemplate, splitNsName} from '../ml_parser/tags';
@@ -113,9 +114,10 @@ export class TemplateParser {
 
   parse(
       component: CompileDirectiveMetadata, template: string, directives: CompileDirectiveSummary[],
-      pipes: CompilePipeSummary[], schemas: SchemaMetadata[],
-      templateUrl: string): {template: TemplateAst[], pipes: CompilePipeSummary[]} {
-    const result = this.tryParse(component, template, directives, pipes, schemas, templateUrl);
+      pipes: CompilePipeSummary[], schemas: SchemaMetadata[], templateUrl: string,
+      preserveWhitespaces: boolean): {template: TemplateAst[], pipes: CompilePipeSummary[]} {
+    const result = this.tryParse(
+        component, template, directives, pipes, schemas, templateUrl, preserveWhitespaces);
     const warnings =
         result.errors !.filter(error => error.level === ParseErrorLevel.WARNING)
             .filter(warnOnlyOnce(
@@ -137,12 +139,17 @@ export class TemplateParser {
 
   tryParse(
       component: CompileDirectiveMetadata, template: string, directives: CompileDirectiveSummary[],
-      pipes: CompilePipeSummary[], schemas: SchemaMetadata[],
-      templateUrl: string): TemplateParseResult {
+      pipes: CompilePipeSummary[], schemas: SchemaMetadata[], templateUrl: string,
+      preserveWhitespaces: boolean): TemplateParseResult {
+    let htmlParseResult = this._htmlParser !.parse(
+        template, templateUrl, true, this.getInterpolationConfig(component));
+
+    if (!preserveWhitespaces) {
+      htmlParseResult = removeWhitespaces(htmlParseResult);
+    }
+
     return this.tryParseHtml(
-        this.expandHtml(this._htmlParser !.parse(
-            template, templateUrl, true, this.getInterpolationConfig(component))),
-        component, directives, pipes, schemas);
+        this.expandHtml(htmlParseResult), component, directives, pipes, schemas);
   }
 
   tryParseHtml(
@@ -253,9 +260,10 @@ class TemplateParseVisitor implements html.Visitor {
 
   visitText(text: html.Text, parent: ElementContext): any {
     const ngContentIndex = parent.findNgContentIndex(TEXT_CSS_SELECTOR) !;
-    const expr = this._bindingParser.parseInterpolation(text.value, text.sourceSpan !);
+    const valueNoNgsp = replaceNgsp(text.value);
+    const expr = this._bindingParser.parseInterpolation(valueNoNgsp, text.sourceSpan !);
     return expr ? new BoundTextAst(expr, ngContentIndex, text.sourceSpan !) :
-                  new TextAst(text.value, ngContentIndex, text.sourceSpan !);
+                  new TextAst(valueNoNgsp, ngContentIndex, text.sourceSpan !);
   }
 
   visitAttribute(attribute: html.Attribute, context: any): any {
diff --git a/packages/compiler/test/directive_normalizer_spec.ts b/packages/compiler/test/directive_normalizer_spec.ts
index 114f2672a0..eacce45c0d 100644
--- a/packages/compiler/test/directive_normalizer_spec.ts
+++ b/packages/compiler/test/directive_normalizer_spec.ts
@@ -6,8 +6,8 @@
  * found in the LICENSE file at https://angular.io/license
  */
 import {CompileAnimationEntryMetadata} from '@angular/compiler';
-import {CompileDirectiveMetadata, CompileStylesheetMetadata, CompileTemplateMetadata, CompileTypeMetadata} from '@angular/compiler/src/compile_metadata';
-import {CompilerConfig} from '@angular/compiler/src/config';
+import {CompileStylesheetMetadata, CompileTemplateMetadata} from '@angular/compiler/src/compile_metadata';
+import {CompilerConfig, preserveWhitespacesDefault} from '@angular/compiler/src/config';
 import {DirectiveNormalizer} from '@angular/compiler/src/directive_normalizer';
 import {ResourceLoader} from '@angular/compiler/src/resource_loader';
 import {MockResourceLoader} from '@angular/compiler/testing/src/resource_loader_mock';
@@ -31,6 +31,7 @@ function normalizeTemplate(normalizer: DirectiveNormalizer, o: {
   interpolation?: [string, string] | null;
   encapsulation?: ViewEncapsulation | null;
   animations?: CompileAnimationEntryMetadata[];
+  preserveWhitespaces?: boolean | null;
 }) {
   return normalizer.normalizeTemplate({
     ngModuleType: noUndefined(o.ngModuleType),
@@ -42,7 +43,8 @@ function normalizeTemplate(normalizer: DirectiveNormalizer, o: {
     styleUrls: noUndefined(o.styleUrls),
     interpolation: noUndefined(o.interpolation),
     encapsulation: noUndefined(o.encapsulation),
-    animations: noUndefined(o.animations)
+    animations: noUndefined(o.animations),
+    preserveWhitespaces: noUndefined(o.preserveWhitespaces),
   });
 }
 
@@ -54,6 +56,7 @@ function normalizeTemplateOnly(normalizer: DirectiveNormalizer, o: {
   interpolation?: [string, string] | null;
   encapsulation?: ViewEncapsulation | null;
   animations?: CompileAnimationEntryMetadata[];
+  preserveWhitespaces?: boolean | null;
 }) {
   return normalizer.normalizeTemplateOnly({
     ngModuleType: noUndefined(o.ngModuleType),
@@ -65,13 +68,14 @@ function normalizeTemplateOnly(normalizer: DirectiveNormalizer, o: {
     styleUrls: noUndefined(o.styleUrls),
     interpolation: noUndefined(o.interpolation),
     encapsulation: noUndefined(o.encapsulation),
-    animations: noUndefined(o.animations)
+    animations: noUndefined(o.animations),
+    preserveWhitespaces: noUndefined(o.preserveWhitespaces),
   });
 }
 
 function compileTemplateMetadata({encapsulation, template, templateUrl, styles, styleUrls,
                                   externalStylesheets, animations, ngContentSelectors,
-                                  interpolation, isInline}: {
+                                  interpolation, isInline, preserveWhitespaces}: {
   encapsulation?: ViewEncapsulation | null,
   template?: string | null,
   templateUrl?: string | null,
@@ -81,7 +85,8 @@ function compileTemplateMetadata({encapsulation, template, templateUrl, styles,
   ngContentSelectors?: string[],
   animations?: any[],
   interpolation?: [string, string] | null,
-  isInline?: boolean
+  isInline?: boolean,
+  preserveWhitespaces?: boolean | null
 }): CompileTemplateMetadata {
   return new CompileTemplateMetadata({
     encapsulation: encapsulation || null,
@@ -94,6 +99,7 @@ function compileTemplateMetadata({encapsulation, template, templateUrl, styles,
     animations: animations || [],
     interpolation: interpolation || null,
     isInline: !!isInline,
+    preserveWhitespaces: preserveWhitespacesDefault(noUndefined(preserveWhitespaces)),
   });
 }
 
@@ -106,6 +112,7 @@ function normalizeLoadedTemplate(
       interpolation?: [string, string] | null;
       encapsulation?: ViewEncapsulation | null;
       animations?: CompileAnimationEntryMetadata[];
+      preserveWhitespaces?: boolean;
     },
     template: string, templateAbsUrl: string) {
   return normalizer.normalizeLoadedTemplate(
@@ -120,6 +127,7 @@ function normalizeLoadedTemplate(
         interpolation: o.interpolation || null,
         encapsulation: o.encapsulation || null,
         animations: o.animations || [],
+        preserveWhitespaces: noUndefined(o.preserveWhitespaces),
       },
       template, templateAbsUrl);
 }
@@ -169,6 +177,18 @@ export function main() {
                   }))
                .toThrowError(`'SomeComp' component cannot define both template and templateUrl`);
          }));
+      it('should throw if preserveWhitespaces is not a boolean',
+         inject([DirectiveNormalizer], (normalizer: DirectiveNormalizer) => {
+           expect(() => normalizeTemplate(normalizer, {
+                    ngModuleType: null,
+                    componentType: SomeComp,
+                    moduleUrl: SOME_MODULE_URL,
+                    template: '',
+                    preserveWhitespaces: <any>'WRONG',
+                  }))
+               .toThrowError(
+                   'The preserveWhitespaces option for component SomeComp must be a boolean');
+         }));
     });
 
     describe('normalizeTemplateOnly sync', () => {
@@ -434,6 +454,28 @@ export function main() {
            expect(template.encapsulation).toBe(viewEncapsulation);
          }));
 
+      it('should use preserveWhitespaces setting from compiler config if none provided',
+         inject(
+             [DirectiveNormalizer, CompilerConfig],
+             (normalizer: DirectiveNormalizer, config: CompilerConfig) => {
+               const template = normalizeLoadedTemplate(normalizer, {}, '', '');
+               expect(template.preserveWhitespaces).toBe(config.preserveWhitespaces);
+             }));
+
+      it('should store the preserveWhitespaces=false in the result',
+         inject([DirectiveNormalizer], (normalizer: DirectiveNormalizer) => {
+           const template =
+               normalizeLoadedTemplate(normalizer, {preserveWhitespaces: false}, '', '');
+           expect(template.preserveWhitespaces).toBe(false);
+         }));
+
+      it('should store the preserveWhitespaces=true in the result',
+         inject([DirectiveNormalizer], (normalizer: DirectiveNormalizer) => {
+           const template =
+               normalizeLoadedTemplate(normalizer, {preserveWhitespaces: true}, '', '');
+           expect(template.preserveWhitespaces).toBe(true);
+         }));
+
       it('should keep the template as html',
          inject([DirectiveNormalizer], (normalizer: DirectiveNormalizer) => {
            const template = normalizeLoadedTemplate(
diff --git a/packages/compiler/test/directive_resolver_spec.ts b/packages/compiler/test/directive_resolver_spec.ts
index 7322277350..b98eb0eab0 100644
--- a/packages/compiler/test/directive_resolver_spec.ts
+++ b/packages/compiler/test/directive_resolver_spec.ts
@@ -79,7 +79,12 @@ class SomeDirectiveWithViewChild {
   c: any;
 }
 
-@Component({selector: 'sample', template: 'some template', styles: ['some styles']})
+@Component({
+  selector: 'sample',
+  template: 'some template',
+  styles: ['some styles'],
+  preserveWhitespaces: true
+})
 class ComponentWithTemplate {
 }
 
@@ -439,6 +444,7 @@ export function main() {
         const compMetadata: Component = resolver.resolve(ComponentWithTemplate);
         expect(compMetadata.template).toEqual('some template');
         expect(compMetadata.styles).toEqual(['some styles']);
+        expect(compMetadata.preserveWhitespaces).toBe(true);
       });
     });
   });
diff --git a/packages/compiler/test/integration_spec.ts b/packages/compiler/test/integration_spec.ts
index c8c4e15e4a..321b37c0d9 100644
--- a/packages/compiler/test/integration_spec.ts
+++ b/packages/compiler/test/integration_spec.ts
@@ -9,7 +9,6 @@
 import {Component, Directive, Input} from '@angular/core';
 import {ComponentFixture, TestBed, async} from '@angular/core/testing';
 import {By} from '@angular/platform-browser/src/dom/debug/by';
-import {getDOM} from '@angular/platform-browser/src/dom/dom_adapter';
 import {browserDetection} from '@angular/platform-browser/testing/src/browser_util';
 import {expect} from '@angular/platform-browser/testing/src/matchers';
 
diff --git a/packages/compiler/test/ml_parser/ast_serializer_spec.ts b/packages/compiler/test/ml_parser/ast_serializer_spec.ts
index 9452c3c9fb..5e33a302d5 100644
--- a/packages/compiler/test/ml_parser/ast_serializer_spec.ts
+++ b/packages/compiler/test/ml_parser/ast_serializer_spec.ts
@@ -97,4 +97,4 @@ const serializerVisitor = new _SerializerVisitor();
 
 export function serializeNodes(nodes: html.Node[]): string[] {
   return nodes.map(node => node.visit(serializerVisitor, null));
-}
\ No newline at end of file
+}
diff --git a/packages/compiler/test/ml_parser/html_whitespaces_spec.ts b/packages/compiler/test/ml_parser/html_whitespaces_spec.ts
new file mode 100644
index 0000000000..7f9f6fa898
--- /dev/null
+++ b/packages/compiler/test/ml_parser/html_whitespaces_spec.ts
@@ -0,0 +1,118 @@
+/**
+ * @license
+ * Copyright Google Inc. All Rights Reserved.
+ *
+ * Use of this source code is governed by an MIT-style license that can be
+ * found in the LICENSE file at https://angular.io/license
+ */
+
+import * as html from '../../src/ml_parser/ast';
+import {HtmlParser} from '../../src/ml_parser/html_parser';
+import {PRESERVE_WS_ATTR_NAME, removeWhitespaces} from '../../src/ml_parser/html_whitespaces';
+
+import {humanizeDom} from './ast_spec_utils';
+
+export function main() {
+  describe('removeWhitespaces', () => {
+
+    function parseAndRemoveWS(template: string): any[] {
+      return humanizeDom(removeWhitespaces(new HtmlParser().parse(template, 'TestComp')));
+    }
+
+    it('should remove blank text nodes', () => {
+      expect(parseAndRemoveWS(' ')).toEqual([]);
+      expect(parseAndRemoveWS('\n')).toEqual([]);
+      expect(parseAndRemoveWS('\t')).toEqual([]);
+      expect(parseAndRemoveWS('    \t    \n ')).toEqual([]);
+    });
+
+    it('should remove whitespaces (space, tab, new line) between elements', () => {
+      expect(parseAndRemoveWS('<br>  <br>\t<br>\n<br>')).toEqual([
+        [html.Element, 'br', 0],
+        [html.Element, 'br', 0],
+        [html.Element, 'br', 0],
+        [html.Element, 'br', 0],
+      ]);
+    });
+
+    it('should remove whitespaces from child text nodes', () => {
+      expect(parseAndRemoveWS('<div><span> </span></div>')).toEqual([
+        [html.Element, 'div', 0],
+        [html.Element, 'span', 1],
+      ]);
+    });
+
+    it('should remove whitespaces from the beginning and end of a template', () => {
+      expect(parseAndRemoveWS(` <br>\t`)).toEqual([
+        [html.Element, 'br', 0],
+      ]);
+    });
+
+    it('should convert &ngsp; to a space and preserve it', () => {
+      expect(parseAndRemoveWS('<div><span>foo</span>&ngsp;<span>bar</span></div>')).toEqual([
+        [html.Element, 'div', 0],
+        [html.Element, 'span', 1],
+        [html.Text, 'foo', 2],
+        [html.Text, ' ', 1],
+        [html.Element, 'span', 1],
+        [html.Text, 'bar', 2],
+      ]);
+    });
+
+    it('should replace multiple whitespaces with one space', () => {
+      expect(parseAndRemoveWS('\n\n\nfoo\t\t\t')).toEqual([[html.Text, ' foo ', 0]]);
+      expect(parseAndRemoveWS('   \n foo  \t ')).toEqual([[html.Text, ' foo ', 0]]);
+    });
+
+    it('should not replace single tab and newline with spaces', () => {
+      expect(parseAndRemoveWS('\nfoo')).toEqual([[html.Text, '\nfoo', 0]]);
+      expect(parseAndRemoveWS('\tfoo')).toEqual([[html.Text, '\tfoo', 0]]);
+    });
+
+    it('should preserve single whitespaces between interpolations', () => {
+      expect(parseAndRemoveWS(`{{fooExp}} {{barExp}}`)).toEqual([
+        [html.Text, '{{fooExp}} {{barExp}}', 0],
+      ]);
+      expect(parseAndRemoveWS(`{{fooExp}}\t{{barExp}}`)).toEqual([
+        [html.Text, '{{fooExp}}\t{{barExp}}', 0],
+      ]);
+      expect(parseAndRemoveWS(`{{fooExp}}\n{{barExp}}`)).toEqual([
+        [html.Text, '{{fooExp}}\n{{barExp}}', 0],
+      ]);
+    });
+
+    it('should preserve whitespaces around interpolations', () => {
+      expect(parseAndRemoveWS(` {{exp}} `)).toEqual([
+        [html.Text, ' {{exp}} ', 0],
+      ]);
+    });
+
+    it('should preserve whitespaces inside <pre> elements', () => {
+      expect(parseAndRemoveWS(`<pre><strong>foo</strong>\n<strong>bar</strong></pre>`)).toEqual([
+        [html.Element, 'pre', 0],
+        [html.Element, 'strong', 1],
+        [html.Text, 'foo', 2],
+        [html.Text, '\n', 1],
+        [html.Element, 'strong', 1],
+        [html.Text, 'bar', 2],
+      ]);
+    });
+
+    it('should skip whitespace trimming in <textarea>', () => {
+      expect(parseAndRemoveWS(`<textarea>foo\n\n  bar</textarea>`)).toEqual([
+        [html.Element, 'textarea', 0],
+        [html.Text, 'foo\n\n  bar', 1],
+      ]);
+    });
+
+    it(`should preserve whitespaces inside elements annotated with ${PRESERVE_WS_ATTR_NAME}`,
+       () => {
+         expect(parseAndRemoveWS(`<div ${PRESERVE_WS_ATTR_NAME}><img> <img></div>`)).toEqual([
+           [html.Element, 'div', 0],
+           [html.Element, 'img', 1],
+           [html.Text, ' ', 1],
+           [html.Element, 'img', 1],
+         ]);
+       });
+  });
+}
diff --git a/packages/compiler/test/template_parser/template_parser_spec.ts b/packages/compiler/test/template_parser/template_parser_spec.ts
index a26e1624db..86664ec95d 100644
--- a/packages/compiler/test/template_parser/template_parser_spec.ts
+++ b/packages/compiler/test/template_parser/template_parser_spec.ts
@@ -5,7 +5,7 @@
  * Use of this source code is governed by an MIT-style license that can be
  * found in the LICENSE file at https://angular.io/license
  */
-import {CompileQueryMetadata, CompilerConfig, JitReflector, ProxyClass, StaticSymbol} from '@angular/compiler';
+import {CompileQueryMetadata, CompilerConfig, JitReflector, ProxyClass, StaticSymbol, preserveWhitespacesDefault} from '@angular/compiler';
 import {CompileAnimationEntryMetadata, CompileDiDependencyMetadata, CompileDirectiveMetadata, CompileDirectiveSummary, CompilePipeMetadata, CompilePipeSummary, CompileProviderMetadata, CompileTemplateMetadata, CompileTokenMetadata, CompileTypeMetadata, tokenReference} from '@angular/compiler/src/compile_metadata';
 import {DomElementSchemaRegistry} from '@angular/compiler/src/schema/dom_element_schema_registry';
 import {ElementSchemaRegistry} from '@angular/compiler/src/schema/element_schema_registry';
@@ -84,7 +84,7 @@ function compileDirectiveMetadataCreate(
 
 function compileTemplateMetadata({encapsulation, template, templateUrl, styles, styleUrls,
                                   externalStylesheets, animations, ngContentSelectors,
-                                  interpolation, isInline}: {
+                                  interpolation, isInline, preserveWhitespaces}: {
   encapsulation?: ViewEncapsulation | null,
   template?: string | null,
   templateUrl?: string | null,
@@ -94,7 +94,8 @@ function compileTemplateMetadata({encapsulation, template, templateUrl, styles,
   ngContentSelectors?: string[],
   animations?: any[],
   interpolation?: [string, string] | null,
-  isInline?: boolean
+  isInline?: boolean,
+  preserveWhitespaces?: boolean | null,
 }): CompileTemplateMetadata {
   return new CompileTemplateMetadata({
     encapsulation: noUndefined(encapsulation),
@@ -106,7 +107,8 @@ function compileTemplateMetadata({encapsulation, template, templateUrl, styles,
     animations: animations || [],
     ngContentSelectors: ngContentSelectors || [],
     interpolation: noUndefined(interpolation),
-    isInline: !!isInline
+    isInline: !!isInline,
+    preserveWhitespaces: preserveWhitespacesDefault(noUndefined(preserveWhitespaces)),
   });
 }
 
@@ -116,7 +118,7 @@ export function main() {
   let ngIf: CompileDirectiveSummary;
   let parse: (
       template: string, directives: CompileDirectiveSummary[], pipes?: CompilePipeSummary[],
-      schemas?: SchemaMetadata[]) => TemplateAst[];
+      schemas?: SchemaMetadata[], preserveWhitespaces?: boolean) => TemplateAst[];
   let console: ArrayConsole;
 
   function commonBeforeEach() {
@@ -148,12 +150,15 @@ export function main() {
 
       parse =
           (template: string, directives: CompileDirectiveSummary[],
-           pipes: CompilePipeSummary[] | null = null,
-           schemas: SchemaMetadata[] = []): TemplateAst[] => {
+           pipes: CompilePipeSummary[] | null = null, schemas: SchemaMetadata[] = [],
+           preserveWhitespaces = true): TemplateAst[] => {
             if (pipes === null) {
               pipes = [];
             }
-            return parser.parse(component, template, directives, pipes, schemas, 'TestComp')
+            return parser
+                .parse(
+                    component, template, directives, pipes, schemas, 'TestComp',
+                    preserveWhitespaces)
                 .template;
           };
     }));
@@ -398,7 +403,8 @@ export function main() {
                externalStylesheets: [],
                styleUrls: [],
                styles: [],
-               encapsulation: null
+               encapsulation: null,
+               preserveWhitespaces: preserveWhitespacesDefault(null),
              }),
              isHost: false,
              exportAs: null,
@@ -417,7 +423,7 @@ export function main() {
 
            });
            expect(humanizeTplAst(
-                      parser.parse(component, '{%a%}', [], [], [], 'TestComp').template,
+                      parser.parse(component, '{%a%}', [], [], [], 'TestComp', true).template,
                       {start: '{%', end: '%}'}))
                .toEqual([[BoundTextAst, '{% a %}']]);
          }));
@@ -2095,6 +2101,66 @@ The pipe 'test' could not be found ("{{[ERROR ->]a | test}}"): TestComp@0:2`);
     });
   });
 
+  describe('whitespaces removal', () => {
+
+    beforeEach(() => {
+      TestBed.configureCompiler({providers: [TEST_COMPILER_PROVIDERS, MOCK_SCHEMA_REGISTRY]});
+    });
+
+    commonBeforeEach();
+
+    it('should not remove whitespaces by default', () => {
+      expect(humanizeTplAst(parse(' <br>  <br>\t<br>\n<br> ', []))).toEqual([
+        [TextAst, ' '],
+        [ElementAst, 'br'],
+        [TextAst, '  '],
+        [ElementAst, 'br'],
+        [TextAst, '\t'],
+        [ElementAst, 'br'],
+        [TextAst, '\n'],
+        [ElementAst, 'br'],
+        [TextAst, ' '],
+      ]);
+    });
+
+    it('should replace each &ngsp; with a space when preserveWhitespaces is true', () => {
+      expect(humanizeTplAst(parse('foo&ngsp;&ngsp;&ngsp;bar', [], [], [], true))).toEqual([
+        [TextAst, 'foo   bar'],
+      ]);
+    });
+
+    it('should replace every &ngsp; with a single space when preserveWhitespaces is false', () => {
+      expect(humanizeTplAst(parse('foo&ngsp;&ngsp;&ngsp;bar', [], [], [], false))).toEqual([
+        [TextAst, 'foo bar'],
+      ]);
+    });
+
+    it('should remove whitespaces when explicitly requested', () => {
+      expect(humanizeTplAst(parse(' <br>  <br>\t<br>\n<br> ', [], [], [], false))).toEqual([
+        [ElementAst, 'br'],
+        [ElementAst, 'br'],
+        [ElementAst, 'br'],
+        [ElementAst, 'br'],
+      ]);
+    });
+
+    it('should remove whitespace between ICU expansions when not preserving whitespaces', () => {
+      const shortForm = '{ count, plural, =0 {small} many {big} }';
+      const expandedForm = '<ng-container [ngPlural]="count">' +
+          '<ng-template ngPluralCase="=0">small</ng-template>' +
+          '<ng-template ngPluralCase="many">big</ng-template>' +
+          '</ng-container>';
+      const humanizedExpandedForm = humanizeTplAst(parse(expandedForm, []));
+
+      // ICU expansions are converted to `<ng-container>` tags and all blank text nodes are reomved
+      // so any whitespace between ICU exansions are removed as well
+      expect(humanizeTplAst(parse(`${shortForm} ${shortForm}`, [], [], [], false))).toEqual([
+        ...humanizedExpandedForm, ...humanizedExpandedForm
+      ]);
+    });
+
+  });
+
   describe('Template Parser - opt-out `<template>` support', () => {
     beforeEach(() => {
       TestBed.configureCompiler({
diff --git a/packages/compiler/testing/src/directive_resolver_mock.ts b/packages/compiler/testing/src/directive_resolver_mock.ts
index ad8176fdaf..c03bb61645 100644
--- a/packages/compiler/testing/src/directive_resolver_mock.ts
+++ b/packages/compiler/testing/src/directive_resolver_mock.ts
@@ -85,7 +85,8 @@ export class MockDirectiveResolver extends DirectiveResolver {
         styles: view.styles,
         styleUrls: view.styleUrls,
         encapsulation: view.encapsulation,
-        interpolation: view.interpolation
+        interpolation: view.interpolation,
+        preserveWhitespaces: view.preserveWhitespaces,
       });
     }
 
diff --git a/packages/core/src/linker/compiler.ts b/packages/core/src/linker/compiler.ts
index 28320877b8..cabedc4fab 100644
--- a/packages/core/src/linker/compiler.ts
+++ b/packages/core/src/linker/compiler.ts
@@ -106,6 +106,7 @@ export type CompilerOptions = {
   // Whether to support the `<template>` tag and the `template` attribute to define angular
   // templates. They have been deprecated in 4.x, `<ng-template>` should be used instead.
   enableLegacyTemplate?: boolean,
+  preserveWhitespaces?: boolean,
 };
 
 /**
diff --git a/packages/core/src/metadata/directives.ts b/packages/core/src/metadata/directives.ts
index a2f29e3271..5c24f372a3 100644
--- a/packages/core/src/metadata/directives.ts
+++ b/packages/core/src/metadata/directives.ts
@@ -676,6 +676,74 @@ export interface Component extends Directive {
    * {@link ComponentFactoryResolver}.
    */
   entryComponents?: Array<Type<any>|any[]>;
+
+  /**
+   * If {@link Component#preserveWhitespaces Component.preserveWhitespaces} is set to `false`
+   * potentially superfluous whitespace characters (ones matching the `\s` character class in
+   * JavaScript regular expressions) will be removed from a compiled template. This can greatly
+   * reduce AOT-generated code size as well as speed up view creation.
+   *
+   * Current implementation works according to the following rules:
+   * - all whitespaces at the beginning and the end of a template are removed (trimmed);
+   * - text nodes consisting of whitespaces only are removed (ex.:
+   *   `<button>Action 1</button>  <button>Action 2</button>` will be converted to
+   *   `<button>Action 1</button><button>Action 2</button>` (no whitespaces between buttons);
+   * - series of whitespaces in text nodes are replaced with one space (ex.:
+   *   `<span>\n some text\n</span>` will be converted to `<span> some text </span>`);
+   * - text nodes are left as-is inside HTML tags where whitespaces are significant (ex. `<pre>`,
+   *   `<textarea>`).
+   *
+   * Described transformations can (potentially) influence DOM nodes layout so the
+   * `preserveWhitespaces` option is `true` be default (no whitespace removal).
+   * In Angular 5 you need to opt-in for whitespace removal (but we might revisit the default
+   * setting in Angular 6 or later). If you want to change the default setting for all components
+   * in your application you can use the `preserveWhitespaces` option of the AOT compiler.
+   *
+   * Even if you decide to opt-in for whitespace removal there are ways of preserving whitespaces
+   * in certain fragments of a template. You can either exclude entire DOM sub-tree by using the
+   * `ngPreserveWhitespaces` attribute, ex.:
+   *
+   * ```html
+   * <div ngPreserveWhitespaces>
+   *     whitespaces are preserved here
+   *     <span>    and here </span>
+   * </div>
+   * ```
+   *
+   * Alternatively you can force a space to be preserved in a text node by using the `&ngsp;`
+   * pseudo-entity. `&ngsp;` will be replaced with a space character by Angular's template
+   * compiler, ex.:
+   *
+   * ```html
+   * <a>Spaces</a>&ngsp;<a>between</a>&ngsp;<a>links.</a>
+   * ```
+   *
+   * will be compiled to the equivalent of:
+   *
+   * ```html
+   * <a>Spaces</a> <a>between</a> <a>links.</a>
+   * ```
+   *
+   * Please note that sequences of `&ngsp;` are still collapsed to just one space character when
+   * the `preserveWhitespaces` option is set to `false`. Ex.:
+   *
+   * ```html
+   * <a>before</a>&ngsp;&ngsp;&ngsp;<a>after</a>
+   * ```
+   *
+   * would be equivalent to:
+   *
+   * ```html
+   * <a>before</a> <a>after</a>
+   * ```
+   *
+   * The `&ngsp;` pseudo-entity is useful for forcing presence of
+   * one space (a text node having `&ngsp;` pseudo-entities will never be removed), but it is not
+   * meant to mark sequences of whitespace characters. The previously described
+   * `ngPreserveWhitespaces` attribute is more useful for preserving sequences of whitespace
+   * characters.
+   */
+  preserveWhitespaces?: boolean;
 }
 
 /**
diff --git a/packages/core/test/linker/integration_spec.ts b/packages/core/test/linker/integration_spec.ts
index bace73d65f..986a745894 100644
--- a/packages/core/test/linker/integration_spec.ts
+++ b/packages/core/test/linker/integration_spec.ts
@@ -1772,6 +1772,51 @@ function declareTests({useJit}: {useJit: boolean}) {
       });
     });
 
+    describe('whitespaces in templates', () => {
+      it('should not remove whitespaces by default', async(() => {
+           @Component({
+             selector: 'comp',
+             template: '<span>foo</span>  <span>bar</span>',
+           })
+           class MyCmp {
+           }
+
+           const f = TestBed.configureTestingModule({declarations: [MyCmp]}).createComponent(MyCmp);
+           f.detectChanges();
+
+           expect(f.nativeElement.childNodes.length).toBe(3);
+         }));
+
+      it('should not remove whitespaces when explicitly requested not to do so', async(() => {
+           @Component({
+             selector: 'comp',
+             template: '<span>foo</span>  <span>bar</span>',
+             preserveWhitespaces: true,
+           })
+           class MyCmp {
+           }
+
+           const f = TestBed.configureTestingModule({declarations: [MyCmp]}).createComponent(MyCmp);
+           f.detectChanges();
+
+           expect(f.nativeElement.childNodes.length).toBe(3);
+         }));
+
+      it('should remove whitespaces when explicitly requested to do so', async(() => {
+           @Component({
+             selector: 'comp',
+             template: '<span>foo</span>  <span>bar</span>',
+             preserveWhitespaces: false,
+           })
+           class MyCmp {
+           }
+
+           const f = TestBed.configureTestingModule({declarations: [MyCmp]}).createComponent(MyCmp);
+           f.detectChanges();
+
+           expect(f.nativeElement.childNodes.length).toBe(2);
+         }));
+    });
 
     if (getDOM().supportsDOMEvents()) {
       describe('svg', () => {
diff --git a/tools/@angular/tsc-wrapped/src/options.ts b/tools/@angular/tsc-wrapped/src/options.ts
index 8b1020105d..fbc7188353 100644
--- a/tools/@angular/tsc-wrapped/src/options.ts
+++ b/tools/@angular/tsc-wrapped/src/options.ts
@@ -90,6 +90,10 @@ interface Options extends ts.CompilerOptions {
   // matched by the `files` / `includes` in the `tsconfig.json`.
   // This is off by default.
   alwaysCompileGeneratedCode?: boolean;
+
+  // Whether to remove blank text nodes from compiled templates. It is `true` by default
+  // in Angular 5 and will be re-visited in Angular 6.
+  preserveWhitespaces?: boolean;
 }
 
 export default Options;
diff --git a/tools/public_api_guard/core/core.d.ts b/tools/public_api_guard/core/core.d.ts
index f4f31ca1a5..91cc4736c2 100644
--- a/tools/public_api_guard/core/core.d.ts
+++ b/tools/public_api_guard/core/core.d.ts
@@ -212,6 +212,7 @@ export declare type CompilerOptions = {
     providers?: any[];
     missingTranslation?: MissingTranslationStrategy;
     enableLegacyTemplate?: boolean;
+    preserveWhitespaces?: boolean;
 };
 
 /** @stable */