An air dryer includes a housing with an air inlet, an air outlet and a liquid drain outlet; and a membrane separator having surfaces extending between a first and second ends of the membrane. A first passage in the housing is connected to the air inlet and air outlet at it respective ends and extends between the first and second ends of the membrane separator along the surfaces of the membrane separator. A second passage in the housing is connected to the drain outlet and air outlet at it respective ends and extends between the first and second ends of the membrane along a surface of the membrane separator. A valve is connected between the second passage and the drain outlet for controlling the draining of the liquid and sweep air flow through the second passage. The dryer is to be inserted in a reservoir at its inlet or outlet. A coalescing filter may be provided in the housing in series with the membrane separator and the housing would include a second drain for the coalescing filter.