Abstract: A compact, gas-fired water heater in which a reservoir of bulk water is indirectly heated by a gas burner-fired immersion tube and directly heated by mutual contact between the hot flue gases from the immersion tube outlet and feed water droplets as they pass each other in contra-flow through the apertures in a plurality of plates and through a packed bed of graded solid particles or Rashig rings. The packed bed may also include suitable chemicals for modifying the quality of the stored water. One or more calorifiers may be located in the reservoir with limited direct heat conduction contact with the immersion tube.