pnreddy,
hmm. Sounds like you MIGHT be thinking about the wrong tool for the job. Depends on what you want to do.
That's 'cause text is fundamentally different than image data. Now, you started with a hard copy, so "image data" was all you had access too. Now that you've got it as a flat electronic image, your options include:
Photoshop (or other image-editing software): You'd use this to "cover up" the place on the page where the text is, then you'd use the type tool to put the new words over the top of it. This assumes that the existing text is on top of a solid background, and not a pattern or a photo or something. You'd also be trying to match the font as closely as possible.
If, right now, you're saying "can't I just click on it and edit the existing text?" The answer is, not really -- you would only be able to do that if you had the original Photoshop file that was used to print the hard copy.
But if that's what you WANT to do, and the document is a letter or a page from a book or something, against a nice white background, there's something you can do with it. You want to run it through an "Optical Character Recognition" program, or OCR. This is a program that looks at an electronic image file, tries to find the letters on it, and makes a new text document (like an MS Word document) from it.
I don't know a good OCR program to recommend, but I've had good luck searching on
www.download.com for programs and utilities like this. Read user ratings before downlaoding and installing stuff, but I'll bet you could find a good, usable program there. It might also be a place to search for an alternative to Photoshop, if you decide to go the image-editing software route.
Hope this helps.
Yours,
Amado