An efficient, compact boiler system providing both heating water for heating an enclosed space, such as a home, and domestic hot water for washing and similar purposes, has a limited fluid capacity primary heating coil within a combustion chamber. The coil supplies heated water to a larger capacity storage boiler located directly below the primary boiler and connected to it by header pipes which themselves form a manifold into which the primary coil is connected. The storage boiler distributes the heated water through the heating system. An elongated secondary heating coil within the boiler heats the domestic hot water supply by heat transfer from the boiler water. The return header pipe discharges heated water directly into the interior loop of the secondary coil to quickly heat the domestic hot water when the burner is "on".