Abstract: A heat recovery system recovers heat from flue gases from a furnace or the like and a hot water cylinder. Flue gases are passed through series of chambers in which coils are located. Water is passed through the coils in a direction opposite to flue gas flow to maximize heat transfer and the heated water is passed to either a heat radiating system or into preheater tank for the hot water supply. The coils for the heat radiation and water heating are in separate circuits and the flue gases from the hot water is passed only over the coil used for water heating. Pumps are used for water recirculation in both the heat radiating circuit and the water heating circuit. The system has application to domestic and industrial furnaces which provide gaseous combustion products with recoverable thermal energy and permits the use of a small diameter exhaust vent without adversely affecting the ignition and combustion system of conventional furnaces.