diff --git a/src/lib/smartStateUpdate.ts b/src/lib/smartStateUpdate.ts
new file mode 100644
index 00000000..4a3cd144
--- /dev/null
+++ b/src/lib/smartStateUpdate.ts
@@ -0,0 +1,159 @@
+/**
+ * Smart State Update Utility
+ * 
+ * Provides intelligent array diffing and merging to prevent
+ * unnecessary re-renders and preserve user interaction state.
+ */
+
+export interface SmartMergeOptions<T> {
+  compareFields?: (keyof T)[];
+  preserveOrder?: boolean;
+  addToTop?: boolean;
+}
+
+export interface MergeChanges<T> {
+  added: T[];
+  removed: T[];
+  updated: T[];
+}
+
+export interface SmartMergeResult<T> {
+  items: T[];
+  changes: MergeChanges<T>;
+  hasChanges: boolean;
+}
+
+/**
+ * Performs intelligent array diffing and merging
+ * 
+ * @param currentItems - The current items in state
+ * @param newItems - The new items fetched from the server
+ * @param options - Configuration options
+ * @returns Merged items with change information
+ */
+export function smartMergeArray<T extends { id: string }>(
+  currentItems: T[],
+  newItems: T[],
+  options?: SmartMergeOptions<T>
+): SmartMergeResult<T> {
+  const {
+    compareFields,
+    preserveOrder = false,
+    addToTop = true,
+  } = options || {};
+
+  // Create ID maps for quick lookup
+  const currentMap = new Map(currentItems.map(item => [item.id, item]));
+  const newMap = new Map(newItems.map(item => [item.id, item]));
+
+  // Detect changes
+  const added: T[] = [];
+  const removed: T[] = [];
+  const updated: T[] = [];
+
+  // Find added and updated items
+  for (const newItem of newItems) {
+    const currentItem = currentMap.get(newItem.id);
+    
+    if (!currentItem) {
+      // New item
+      added.push(newItem);
+    } else if (hasItemChanged(currentItem, newItem, compareFields)) {
+      // Item has changed
+      updated.push(newItem);
+    }
+  }
+
+  // Find removed items
+  for (const currentItem of currentItems) {
+    if (!newMap.has(currentItem.id)) {
+      removed.push(currentItem);
+    }
+  }
+
+  const hasChanges = added.length > 0 || removed.length > 0 || updated.length > 0;
+
+  // If no changes, return current items (preserves object references)
+  if (!hasChanges) {
+    return {
+      items: currentItems,
+      changes: { added: [], removed: [], updated: [] },
+      hasChanges: false,
+    };
+  }
+
+  // Build merged array
+  let mergedItems: T[];
+
+  if (preserveOrder) {
+    // Preserve the order of current items
+    mergedItems = currentItems
+      .filter(item => !removed.some(r => r.id === item.id))
+      .map(item => {
+        const updatedItem = updated.find(u => u.id === item.id);
+        return updatedItem || item; // Use updated version if available, otherwise keep current
+      });
+
+    // Add new items at top or bottom
+    if (addToTop) {
+      mergedItems = [...added, ...mergedItems];
+    } else {
+      mergedItems = [...mergedItems, ...added];
+    }
+  } else {
+    // Use the order from newItems
+    mergedItems = newItems.map(newItem => {
+      const currentItem = currentMap.get(newItem.id);
+      
+      // If item exists in current state and hasn't changed, preserve reference
+      if (currentItem && !updated.some(u => u.id === newItem.id)) {
+        return currentItem;
+      }
+      
+      return newItem;
+    });
+  }
+
+  return {
+    items: mergedItems,
+    changes: { added, removed, updated },
+    hasChanges: true,
+  };
+}
+
+/**
+ * Checks if an item has changed by comparing specific fields
+ */
+function hasItemChanged<T>(
+  currentItem: T,
+  newItem: T,
+  compareFields?: (keyof T)[]
+): boolean {
+  if (!compareFields || compareFields.length === 0) {
+    // Deep comparison if no specific fields provided
+    return JSON.stringify(currentItem) !== JSON.stringify(newItem);
+  }
+
+  // Compare only specified fields
+  for (const field of compareFields) {
+    if (currentItem[field] !== newItem[field]) {
+      return true;
+    }
+  }
+
+  return false;
+}
+
+/**
+ * Creates a stable ID set for tracking interactions
+ */
+export function createStableIdSet(ids: string[]): Set<string> {
+  return new Set(ids);
+}
+
+/**
+ * Checks if an ID is in an interaction set
+ */
+export function isInteractingWith(id: string, interactionSet: Set<string>): boolean {
+  return interactionSet.has(id);
+}