Abstract: A high efficiency heat transfer system includes a power circuit (350) and heat pump circuit (352). Each circuit having a working fluid flowing therein. In the power circuit, a heater (354) vaporizes the working fluid which is periodically delivered and exhausted through a valve assembly (358) to a power unit (362). The power unit is also a compressor for the working fluid in the heat pump circuit. Fluid exhausted from the driven section of the power unit is passed to a four-way valve (406) which selectively delivers the working fluid to an interior coil (416) or an exterior coil (408) to heat or cool an area. In extremely cold ambient temperatures, the area is heated directly from the power circuit using a by-pass exchanger (428).