Select elements between others

I have received, what I consider to be, a badly designed xml file:
<data>
 <block/>
   <item>One</item>
   <item>Two</item>
 <block/>
   <item>One</item>
   <item>Two</item>
   <item>Three</item>
  <block/>
   <item>One</item>
</data>

I want to turn this into a more normal form to make it easier to manage:

<data>
 <block>
   <item>One</item>
   <item>Two</item>
 </block>
 <block>
   <item>One</item>
   <item>Two</item>
   <item>Three</item>
 </block>
 <block>
   <item>One</item>
 </block>
</data>

Thanks

Joe

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