See http://gathering.tweakers.net/forum/list_message/40786944#40786944

whitespacewatermarker.cs

using System;
using System.Linq;
using System.Text;

//Demonstrate usage
class Program
{
    static void Main(string[] args)
    {
        var ww = new WhitespaceWatermarker();

        var watermarkedtext = ww.Watermark("Lorem ipsum\r\ndolor sit amet", "s3cr3t");
        var watermark = ww.ReadWatermark(watermarkedtext);
    }
}

/// <summary>
/// Contains functions for 'watermarking' plain text using whitespace (tabs and spaces).
/// </summary>
/// <remarks>
/// This class is written purely as an academic exercise and as "proof of concept".
/// </remarks>
public class WhitespaceWatermarker
{
    /// <summary>
    /// "Watermarks" a text by appending whitespace at the end of the string.
    /// </summary>
    /// <param name="text">The string to watermark.</param>
    /// <param name="watermark">The watermark to add to the text.</param>
    /// <returns>Returns the watermarked text.</returns>
    /// <exception cref="ArgumentNullException">Thrown when either text or watermark is null.</exception>
    public string Watermark(string text, string watermark)
    {
        if (text == null)
            throw new ArgumentNullException("text");
        if (watermark == null)
            throw new ArgumentNullException("watermark");

        var w = new StringBuilder().AppendLine(text);       //Initialize stringbuilder and ensure a newline is appended at the end
        for (int i = 0; i < watermark.Length; i++)          //Iterate each char in watermark and "encode" to "binary" (0 = \t, 1 = <space>)
            w.Append(Convert.ToString(watermark[i], 2).PadLeft(8, '0').Replace('0', '\t').Replace('1', ' '));

        return w.ToString();
    }

    /// <summary>
    /// Reads a watermark (if any) from a text.
    /// </summary>
    /// <param name="text">The string to extract the watermark from (if any).</param>
    /// <returns>Returns the watermark (if any) found in the text.</returns>
    /// <exception cref="ArgumentNullException">Thrown when text is null.</exception>
    /// <exception cref="FormatException">Thrown when text doesn't contain a watermark.</exception>
    public string ReadWatermark(string text)
    {
        if (text == null)
            throw new ArgumentNullException("text");

        var w = text.Split(new[] { '\r', '\n' }).Last();    //Get last line (should be watermark)

        //Watermark length should be > 0 and a multiple of 8 and should be whitespace
        if (!string.IsNullOrWhiteSpace(w) || (w.Length == 0) || (w.Length % 8 != 0))
            throw new FormatException("No watermark detected");

        var d = new StringBuilder();
        var x = w.Replace('\t', '0').Replace(' ', '1');     //"Decode" tabs/spaces back to zeroes and ones
        for (int i = 0; i < x.Length; i += 8)               //Iterate "binary string" and "decode" each char
            d.Append((char)Convert.ToByte(x.Substring(i, 8), 2));

        return d.ToString();
    }
}