In the present study, ANSYS Fluent Computational Fluid Dynamics CFD package is utilized to analyze the combustion of premixed propane/air mixture in a cylindrical combustion chamber surrounded by an annular space where cold water enters to and exits from the annular space, simply simulating gas/water heater. The combustion process is assumed to take place in one step (one reaction). Species transport and finite rate/eddy dissipation is used. The flow is assumed to turbulent and standard k- is employed. The effect of the equivalence ratio, , (0.55-1.0) and the inlet gas mixture temperature (400K-600K) on the combustion process in investigated. The temperature and species mass fractions as well as their contours are presented. Also, the combustion efficiency and the heat release rate