<?
$test = fopen("test1.txt", "r") or die("unable to open file");
 while (!feof($test))
 {
 $line = fgets($test, 1024);
 $line = nl2br($line);
 print $line; 
 } 
?>
contents of file test1.txt:
test
test
test

In HTML:
test<br />
test<br />
test<br />

That is to say <br /> instead of <br>