  We present a description of inclusive and diffractive structure functions in
DIS at small $x$, using a model based on high energy factorization. In this
model the two processes have physical interpretation in terms of the virtual
photon wave function and the dipole cross section. We postulate the dipole
cross section form in a way in which unitarity is taken into account. A good
description of data (including DIS diffraction) is obtained after determining
three parameters of the dipole cross section from the fit to inclusive data
only.
