Grouping of a plain html files

Hi all,
Can anybody help me out to get the required output.

Input
      <div class="TOC">
        <p class="TOC_entry_level1">Ent<i>r</i>y 1-1</p>
        <p class="TOC_entry_level1">Ent<b>r</b>y 1-2</p>
        <p class="TOC_entry_level1">Ent<b>r</b>y 1-3</p>
        <p class="TOC_entry_level2">Ent<b>r</b>y 2-1</p>
        <p class="TOC_entry_level2">Ent<b>r</b>y 2-2</p>
        <p class="TOC_entry_level1">Ent<i>r</i>y 1-4</p>
        <p class="TOC_entry_level2">Ent<b>r</b>y 2-3</p>
      </div

XSL
<xsl:template match="div[@class='TOC']">
 <toc>
  <xsl:apply-templates select="p[1][@class='TOC_entry_level1']"/>
 </toc>
</xsl:template>

<xsl:template match="p[@class='TOC_entry_level1']">
 <entry1>
  <xsl:apply-templates select="." mode="label1"/>
   <xsl:if test="following::p[1][@class='TOC_entry_level2']">
    <xsl:apply-templates select="following::p[1][@class='TOC_entry_level2']"/>
   </xsl:if>
 </entry1>
    <xsl:apply-templates select="following::p[1][@class='TOC_entry_level1']"/>
</xsl:template>

<xsl:template match="p[@class='TOC_entry_level2']">
 <entry2>
  <xsl:apply-templates select="." mode="label1"/>
 </entry2>
 <xsl:if test="following::p[1][@class='TOC_entry_level2']">
   <xsl:apply-templates select="following::p[1][@class='TOC_entry_level2']"/>
 </xsl:if>
 <xsl:if test="following::p[1][@class='TOC_entry_level1']">
   <xsl:apply-templates select="following::p[1][@class='TOC_entry_level1']"/>
 </xsl:if>
</xsl:template>

<xsl:template match="p" mode="label1">
  <xsl:apply-templates/>
</xsl:template>

OUTPUT of Above XSL
<toc>
 <entry1>Ent<i>r</i>y 1-1</entry1>
 <entry1>Ent<b>r</b>y 1-2</entry1>
 <entry1>Ent<b>r</b>y 1-3
  <entry2>Ent<b>r</b>y 2-1</entry2>
  <entry2>Ent<b>r</b>y 2-2</entry2>
  <entry1>Ent<i>r</i>y 1-4
   <entry2>Ent<b>r</b>y 2-3</entry2>
  </entry1>
</entry1>
</toc>

REQUIRED OUTPUT
<toc>
 <entry1>Ent<i>r</i>y 1-1</entry1>
 <entry1>Ent<b>r</b>y 1-2</entry1>
 <entry1>Ent<b>r</b>y 1-3
  <entry2>Ent<b>r</b>y 2-1</entry2>
  <entry2>Ent<b>r</b>y 2-2</entry2>
  </entry1>
  <entry1>Ent<i>r</i>y 1-4
   <entry2>Ent<b>r</b>y 2-3</entry2>
  </entry1>
</toc>
Thanks
...JSR