Abstract: What is disclosed is a water heating system characterized by a remote hot water storage tank having water interconnections with a heat pump unit and a remote, timed water circulating pump and water circuit incorporating temperature sensor and thermostat. The heat pump unit is adapted to be employed at a location near a kitchen or laundry room and includes conventional constituents such as compressor, condenser, expansion device, and evaporator connected in a closed refrigerant circuit; blower for circulating air from conditioned space across the evaporator; and pump for circulating water past the hot refrigerant gas in the condenser. The condenser comprises a double-walled heat exchanger for preventing contamination between the respective fluids. The heat pump unit comprises a cabinet housing the same and having a warm air inlet adjacent its bottom and cool air outlet adjacent its top.