It really should be a combination of both. The exercise part does not have to be what you would consider traditional exercise, it can be walking to the shops instead of driving, parking a little further away from a destination, using stairs instead of lifts etc. I try to keep away from the phrase "diet" as it tends to imply that it’s only a temporary thing and if that’s the case, when you finish it, it’s easier to go back to old habits which will put the weight back on. I found that a few simple things like cutting right down on bread, late night junk snacks and watching portion size, while doing a little bit more walking and using stairs really worked for me, and when you do it slowly, it’s far more likely that you will keep the weight off.