I have written a simple program that counts the number of words in the input stream. There is a small bug in the code and i am not able to figure out the cause of this bug.

#include <stdio.h>
int main()
{
int ichar = 0;
int in_word = 1; 
// in_word = 1 *outside a word* in_word = 0 *inside a word*
int wc = 0;
while((ichar = getchar()) != EOF )
{
    if ((( ichar != ' ' )||(ichar != '\n' )||(ichar !='\t')) && ( in_word == 1 ))
        {
        in_word = 0;
        wc ++ ;
        }
    else if (( ichar == ' ' )||(ichar == '\n' )||(ichar =='\t'))
        {
        in_word = 1;
        }
}
printf ( "Total number of words %d\n" , wc);
return 0;
}

Your code is basically counting characters and not words; try this, I've not tested it, but should work

#include <stdio.h>
int main()
{
int ichar = 0;
int in_word = 1; 
// in_word = 0 *outside a word* in_word = 1 *inside a word*
int wc = 0;
while((ichar = getchar()) != EOF ) 
{
    if (( ichar != ' ' )||(ichar != '\n' )||(ichar !='\t'))
        {
        in_word = 1;
        }
    else if ((( ichar == ' ' )||(ichar == '\n' )||(ichar =='\t')) && ( in_word == 1 ))
        {
        in_word = 0;
        wc ++ ;
        }
}
printf ( "Total number of words %d\n" , wc);
return 0;
}

Every time a letter is in a word and is not whitespace, you add 1 to wc. That happens twice when you type in ab.

I'd use a few loops:

#include <stdio.h>
#include <ctype.h>

int main()
{
        int wordcount=0;

        while(!feof(stdin))
        {
                int c;
                while(isspace(c=fgetc(stdin));

                if(c < 0) break;
                wordcount++;

                while(!isspace(c=fgetc(stdin)))
                {
                        if(c<0) break;
                }

                if(c<0) break;
        }

        printf("wordcount %d\n", wc);
}

if (( ichar != ' ' ) && ( ichar != '\n' ) && ( ichar != '\t' ) && ( in_word == 1 ))

This looks right to me. I'm curious if this was successful?