A heating system which includes a combination of a sliding vane compressor, a positive pressure combustor and a sliding vane expander is disclosed. The components of the present system have been found to operate together to permit full use of the B.T.U. value of fuel. In an alternative embodiment, the heating system uses heat extracted from the ambient air as the heat source. The system may also be operated as an air conditioning system, rejecting heat from the system to the ambient air.