A compact hydrogen generator for use with fuel cells and other applications includes a hydrogen membrane reactor (12) having a combustion chamber and a reaction chamber. The two chambers have a fluid connection and a heat exchange relationship with one another. The hydrogen generation apparatus also includes a fuel supply (14), a fuel supply line (20) for transporting fuel from the fuel supply (14) to the reaction chamber, an oxygen supply (16), an oxygen supply line (22) for transporting oxygen from the oxygen supply (16) to the combustion chamber, as well as a tail gas supply line (23) for transporting tail gases from the reaction chamber, a combustion by-product line (24) for tansporting combustion by-products from the combustion chamber, and a reaction product line (26) for transporting hydrogen from the reaction chamber.