The whitespace in the html code (that makes it readable) has absolutely nothing to do with with whitespace being rendered between paragraphs when viewing/reading (unless in the unlikely event you ARE using "white-space:pre-wrap" somewhere).
Margin between paragraphs is default. If you don't want it, you need to use styling (external, internal or inline) to tell it you don't want that default margin.
Create a stylesheet, link it to your html file(s) and add an entry that looks like:
Code:
p {
margin: 0;
text-indent: 1.2em;
}
That should get you started.