Replace a line with multiple lines in a file

This is what the sed s command was built for:

shopt -s extglob

ORIG="foo(1,2)"
REP="if (a > 1) {  
      foo(1,2)  
} else {  
      bar(1,2)  
}"

REP="${REP//+(
)/\\n}"

sed "s/$ORIG/$REP/g" inputfile > outputfile

Note that the REP="${REP//\+( )/\\n}" lines are only needed if you want to define the REP in the formatted way that I did on line two. It might be simpler if you just used \n and \t in REP to begin with.

Edit: Note! You need to escape ' and \ as well in your REP if you have them.

Edit in response to the OP's question

To change your original file without creating a new file, use sed's --in-place flag, like so:

sed --in-place "s/$ORIG/$REP/g" inputfile

Please be careful with the --in-place flag. Make backups before you run it because all changes will be permanent.