A new type of heat exchanger, in which flue gas flows inside narrow tubes and water is on the shell side, was proposed to develop the performance and compactness of the shell-and-tube type heat exchanger for latent heat recovery from flue gas. The effects of tube diameter (1.0-5.0mm) and heat exchange length (7-100mm) on the heat transfer characteristics of a single tube were systematically investigated by measuring the gas outlet temperature, the pressure loss of the gas, and the condensation rate for moist air. It was shown that the usage of narrower tubes was remarkably effective in achieving the high performance. A rapid temperature drop occurred near the inlet and a high heat transfer rate were realized for narrower tubes with inner diameters of 1.0 and 2.0mm than with thicker tubes due to the smaller heat capacity flow rate and higher heat transfer coefficient. In addition, the increase in the heat transfer area per volume in the narrow tube type heat exchanger contributed to the compactness. The heat exchanging volume was successfully downsized by one-twentieth by changing the 5.0-mm inner diameter tubes to smaller tubes with 1.0-mm inner diameters.