While updating the post-editor, the Blogger team has set the default settings of "Edit HTML settings" under "Post Options" to "Ignore newlines".
Due to this, bloggers who use Edit HTML instead of Compose mode to write posts, are facing problems in separating new lines.
So follow these simple instructions to make things easy again.
Edit any of your previous posts, and at the bottom of the post-editor frame, click on the link "Post Options" to expand it.
Now under "Edit HTML Settings", select the radio button "Convert newlines to
s", then click on save now or publish post button.
Now, this option will be saved for your account and you need not change this setting every time you write a new post. Of course you can undo this change anytime you want.