Just had the engineer man out - it was the diverter valve, and was cheap to repair - the repair kit cost me £15 - the replacement is probably more but not hugely expensive I would imagine, cos he said sometimes a new one is even cheaper that the repair kit. Not the case in my instance.
Labour cost me £25, so £40 altogether.
If you open up the front with a screwdriver, you will see a round thing on the left side. On there is a pin, and in my case it was the pin (thats supposed to extend out and hit a switch when we use hot water), was only extending out a little way, it was leaking water and all limescaled up.
The engineer repaired in about half an hour - not a big job at all.
Hope this helps - sorry for the lack of technical terms, apart from this I know nothing about boilers!
Emma, February 2008