Abstract: A towel dispenser for dispensing a towel loop so that the planes of the exit leg and the return leg of the loop are substantially in line with the user. The towel dispenser comprises a housing having front and rear walls and joined by a top wall and a base. The housing is adapted for mounting so that the rear wall is adjacent the wall or other structure on which the dispenser is mounted. A towel outlet and inlet slot are provided in the base and extend between the front and rear walls. A skid plate supports a clean towel roll which is dispensed between a drive and pinch roller. A take up roller winds up used towel. When not in use, the towel loop is substantially completely withdrawn into the housing.