Abstract: A water heating system includes a boiler which is connected with a source of water supply for receiving water under pressure. An exhaust flue is connected to the boiler for the discharge of gaseous products of combustion. A pair of concentrically arranged coils is positioned within the exhaust flue and is connected with the conduit feeding water to the boiler. A recycle loop is thus provided for withdrawing a minor portion of the water being fed to the boiler and for recycling same at a higher temperature to the feed conduit. The water circulates within the loop by natural connection.