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A new type of the external combustion, or generally, externally heated engine is presented. The engine is composed of four essential parts: expander, compressor, heater and cooler. The expander and compressor are placed in one cylinder with one piston connected to the conventional crankshaft system. Air can be used as the working medium of the closed cycle of the engine. Heat delivered to the working air in the heater (or several heaters working commutatively) may come from a combustion chamber or other heat generators of arbitrary types. The engine construction and the thermodynamic cycle performed by the engine are original ones. The results of computer simulation of the engine operation are presented in this paper. The preliminary optimization of the engine cycle for the comparatively low basic pressure of the cycle (the cooler pressure) pcl = 1 MPa leads to the conclusion that e.g. 30 kW per 1 liter of the cylinder volume at 1500 rev/min and the efficiency 0.38 can be achieved.