xmllint from libxml2

xmllint --format file.xml

(On Debian-based distributions, install the libxml2-utils package.)

xml_pp from the XML::Twig perl module

xml_pp < file.xml

(On Debian-based distributions, install the xml-twig-tools package.)

XMLStarlet

xmlstarlet format --indent-tab file.xml

Tidy

tidy -xml -i -q file.xml

Python's xml.dom.minidom

echo '<root><foo a="b">lorem</foo><bar value="ipsum" /></root>' |
  python -c 'import sys, xml.dom.minidom; print(xml.dom.minidom.parseString(sys.stdin.read()).toprettyxml())'

saxon-lint (my own project)

saxon-lint --indent --xpath '/' file.xml

saxon-HE

echo '<root><foo a="b">lorem</foo><bar value="ipsum" /></root>' |
  java -cp /usr/share/java/saxon/saxon9he.jar net.sf.saxon.Query \
       -s:- -qs:/ '!indent=yes'

xidel

xidel --output-node-format=xml --output-node-indent -se . -s file.xml

(Credit to Reino)

Output for all commands:

<root>
  <foo a="b">lorem</foo>
  <bar value="ipsum"/>
</root>

It's a bad idea to use sed for this, what you seems to do is to format the XML file.

It's a simple task for any XML parser, ex :

xmllint --format file.xml

This utility is often installed by default on GNU Linux, or with the package libxml2

or

xmlstarlet format file.xml

Supercat and grcat (grc) can do piped syntax highlighting. You'll probably have to make or find configuration files for XML. They are both available in the Ubuntu repositories as well as at the links provided.

Pygmentize has XML highlighting included. It's available as "python-pygments" in the Ubuntu repositories or by using easy_install Pygments.

xmllint --format xmlfile.xml | pygmentize -l xml | less