A filtration assembly filters diesel fuel used by a diesel engine and includes a filter element disposed within a housing. The housing includes an unfiltered fuel inlet and a filtered fuel outlet. The filter element disposed within the housing receives fuel from the fuel inlet. The filter element defines a peripheral wall sealably engaging filter media defining an unfiltered side and a filtered side of the filter element. The unfiltered side is enclosed with an impermeable barrier affixed to the peripheral wall and the filtered side is enclosed with a permeable water diffuser through which filtered fuel passes. A water separator assembly is disposed externally to the filter element receiving filtered fuel from the water diffuser. The water separator assembly includes water separator media preventing water from passing into the separator. The separator assembly interconnects to the filtered fuel outlet providing filtered, dewatered diesel fuel to the diesel engine.