A water supply system includes a main water tank and a sub-tank of smaller dimensions than the main tank for supplying hot and cold water for household use. The sub-tank is surrounded by a tubular coil of refrigerant in contact with the sub-tank, a layer of insulation and an outer wall for maintaining the insulation in place and protecting the tubular coil and sub-tank from being damaged. A water heater is disposed in or below a lower part of the tank and a three-way switch is provided for selecting heating or refrigeration during different seasons of the year.