Text documents can be watermarked by patterning the inter-word spaces. This paper proposes a text watermarking algorithm that exploits the novel concepts of word classification and inter-word space statistics. The words are classified using some features. Several adjacent words are grouped into a segment, and the segments are also classified using the word class information. The same amount of information is inserted into each of the segment classes. The information is encoded by modifying some statistics of inter-word spaces of the segments belonging to the same class. Several advantages over the conventional word-shift algorithms are discussed.