A water stratification drum for use in an electric and condensing water heater is disposed in a lower portion of the water holding tank and across the circumferential side wall of the tank. The water stratification drum has a pair of plates held spaced-apart by support members which extend between the pair of plates to maintain the plates in substantially parallel relationship. A cold water zone is defined between the plates and cool domestic water is introduced in the tank between the plates. The plates are flat disc plates formed on non-corrosive material and water there between is diffused in a controlled manner to other regions of the tank through at least one of the plates being perforated. The diffusion of the water prevents premature actuation of the heat source by not causing an abrupt change in the temperature of the hot water in the tank.