Abstract: A system for removing oil from an oil-water dispersion such as in bilge water to form an effluent of high purity. At least one container for a coalescing medium (e.g., resin particles) is positioned in the interior of an upright reservoir wall and includes a liquid permeable lower wall in a frusto-conical shape in contact with water in the reservoir. The dispersion is directed through the coalescing medium wherein small oil droplets coalesce into larger ones which float to the surface of the aqueous reservoir to form a floating oil layer on the water. Purified water flows out from the lower portion of the reservoir in a radially outward direction from the coalescing medium container thereby reducing the water flow rate. Prior to flow through the coalescing medium, the dispersion is optionally passed into a holding tank wherein material heavier than water is settled for periodic removal of heavy contaminants. Pitch accommodating means is provided to adapt the system to ship board use.