In this paper, we proposed and demonstrated a novel gas-fuelled hot water system based on combined power and heat pump cycles. It essentially integrates a premixed gas burner, an organic Rankine cycle (ORC) power plant, and an air source heat pump for supplying hot water. An ORC power plant generates mechanical power from the thermal energy produced from the combustion of natural gas in the burner. Subsequently, the generated power directly drives a vapour compression cycle heat pump through a common shaft connecting the expander and the compressor. Cold tap water is headed firstly in the condenser of the heat pump, then in the condenser of the ORC power plant, and finally the flue gas exiting from the burner in a post heater. The flue gas exiting the post heater will be mixed with ambient air to further extract its residual heat in the evaporator of the heat pump. The advantages of the proposed system are threefold. First, the waste heat of the power cycle has been fully recovered. Second, the heat pump operates on a much lower temperature difference, leading to 2 higher COP. Third, it has no electrical generator or motor, avoiding the transduction losses. A comprehensive analysis has been presented in this paper, and the results show that the proposed system can achieve an overall fuel-to-heat efficiency up to 147% when the cold water is heated from 10 to 65 °C and the ambient air temperature is in the range-5 to 5 °C. The research results demonstrated that the proposed technology has a great potential for hot water applications.