This report describes the annual progress made in the development and analysis of a Diffusion Driven Desalination (DDD) system. A combined thermodynamic and dynamic analysis demonstrates that the DDD process can yield a fresh water production of 1.03 million gallon/day by utilizing waste heat from a 100 MW steam power plant based on a condensing steam pressure of only 3'' Hg. Throughout the past year, the main focus of the desalination process has been on the diffusion tower and direct contact condenser. Detailed heat and mass transfer analyses required to size and analyze these heat and mass transfer devices are described. An experimental DDD facility has been fabricated, and temperature and humidity data have been collected over a range of flow and thermal conditions. The analyses agree quite well with the current data and the information available in the literature. Direct contact condensers with and without packing have been investigated. It has been experimentally observed that the fresh water production rate is significantly enhanced when packing is added to the direct contact condensers.