After a long search I found a working solution which also works without the natbib package:
% ADD THE FOLLOWING COUPLE LINES INTO YOUR PREAMBLE
\let\OLDthebibliography\thebibliography
\renewcommand\thebibliography[1]{
\OLDthebibliography{#1}
\setlength{\parskip}{0pt}
\setlength{\itemsep}{0pt plus 0.3ex}
}Latex ligatures make a fine typesetting, but sometimes you might want to turn them off — for example if people should be aber to copy the text from the pdf document or if you need to export the pdf to a doc.
You can turn off ligatures with the following commands in the preamble of the Latex document:
\usepackage{microtype}
\DisableLigatures{encoding = *, family = * }
WriteLaTeX is an on-line collaborative LaTeX editor. You can edit the code in a web browser similar to codepad and provides a live preview of the document. Images and bibliography files can be uploaded.
Standard LateX editors are optimized for small screens. But we are in 2012 and have big screens and your next monitor or laptop screen will likely even have larger resolution. The eclipse-plugin Texlipse takes advantage of this and provides an IDE for editing LateX documents with a real-time preview.
TeXlipse: Eclipse IDE for LateX
So, unless you have netbook, get the plug-in at http://texlipse.sourceforge.net/.