You are very close. Since you state that your words are already whitespace separated, you need to use str.split to make a list of words.
An example is below:
dictionary = {}
text_string = 'there are repeated words in this sring with many words many are repeated'
for item in text_string.split():
if item in dictionary:
dictionary[item] = dictionary[item]+1
else:
dictionary[item] = 1
print(dictionary)
{'there': 1, 'are': 2, 'repeated': 2, 'words': 2, 'in': 1,
'this': 1, 'sring': 1, 'with': 1, 'many': 2}
Another solution is to use collections.Counter, available in the standard library:
from collections import Counter
text_string = 'there are repeated words in this sring with many words many are repeated'
c = Counter(text_string.split())
print(c)
Counter({'are': 2, 'repeated': 2, 'words': 2, 'many': 2, 'there': 1,
'in': 1, 'this': 1, 'sring': 1, 'with': 1})