Abstract: Disclosed are system 100 and method of energy efficient hot and cold water management. The system 100 comprises: a control unit 101 for dynamically controlling the functioning of the system 100; at least a water storage tank 102 with at least one of a water level sensor, at least a heating element 1021, at least a temperature sensor 1022 or any combination thereof; at least an auxiliary water storage tank 103 with at least one of a water level sensor, at least a temperature sensor 1032; at least a water mixer unit 105 having at least a temperature sensor 1051; a user interface unit 1012 for controlling and monitoring different parameters including temperature, water level, opening and closing of valves 108 and 109; and a power supply with power backup unit 104 for providing basic power for proper functioning of the system 100.