A combined hot water and air heating and conditioning system including a first heat exchanger, a heat pump, a chilling tower loop, a burner and a second heat exchanger to provide hot water, air heating and air cooling. The system provides hot water, air heating and cooling all in one single unit. The system utilizes a heat pump to remove heat from ambient air and transfer the rejected heat into a hot water system, thereby using waste heat to heat the hot water system. The system utilizes a heat exchanger not only for the purpose of transferring heat from a heating source to a fluid in the heat exchanger but also for the purpose of dissipating heat from the fluid in the heat exchanger to the surroundings of the heat exchanger, thereby allowing a heat pump to act both as an air heating and conditioning device.