Abstract: This invention relates to an improvement in direct contact water heaters and in methods of effecting heat exchange between hot gas and cold water. In a typical direct contact water heater cold water is sprayed downwards within a main chamber where it meets hot gas passing upwardly in a counter-current fashion. A direct contact water heater according to this invention includes an antechamber through which the hot gas is passed before entering the main chamber. The hot gas passing upwardly in a counter current fashion to hot water which is at a temperature higher than the dew point of the gas raises the dew point of the hot gas before it enters the main chamber so that the cold water entering the main chamber is heated in an efficient manner to higher temperatures than could previously be effected.