A text terminal in which a text stream received on a communication link is segmented by a segmenter into chained variable-length segments which are stored in a random access text store. Each segment can contain at most one extended formatting command. Segments have slack areas to allow the subsequent insertion of text. A text editor receives keystroke signals from a keyboard and modifies the stored text stream, new segments being created as necessary for extended formatting commands or when slack areas are full. An interpreter/formatter is invoked when a received text stream has been segmented or when the stored text stream has been modified to format and map the stored text stream into a refresh buffer driving a cathode ray tube (CRT) display. The interpreter/formatter maintains a status index with condensed versions of the extended formatting commands stored in the text stream. Formatting is inhibited by the editor if it receives a keystroke requiring modification of the stored text. After editing segmented text is desegmented by a desegmenter and returned to the host along a communication link in the form in which it was received. Preferably, the terminal is implemented with a microprocessor which can also control standard data entry applications as well as text processing.