A water heater that can be operated with improved efficiency is provided. The water heater uses a thermally activated sorption heat pump to heat water stored in a tank. A sorbate is endothermically desorbed from a refrigerant, which in turn is released as a gas or vapor. The latent heat of condensing this refrigerant vapor to a liquid is transferred directly to the water in the tank. Ambient air is then used to vaporize the refrigerant liquid. The vapor refrigerant is then exothermically absorbed by the sorbate. The heat released by this absorption is transferred to the water in the tank using a heat transfer fluid. The cycle can then be repeated by desorbing the sorbate again to release the refrigerant as vapor. A heat source is used to provide heat energy to endothermically desorb the sorbate.