A new kind of governing equations for water hammer based on the elastic column theory was proposed and adopted to analyse water hammer phenomenon in the pipe system with a vertical column surge chamber and water level fluctuation in the surge chamber during pressure transient. The wrongness existing in the classical governing equations for water hammer was analysed. A typical reservoir-valve pipe system was chosen as an example to verify the new governing equations numerically and experimentally. The finite difference method based on the method of characteristics was used to solve numerically the nonlinear characteristic equations. The temporal evolutions of transient volume flux and head and of water level fluctuation for various surge chamber configurations were worked out, assuming that the air in the surge chamber are compressible. The relevant experiment was conducted to verify the new governing equations and numerical method. The numerical and experimental results show that the new governing equations are valid and the conventional assumption that the pressure head at the base of a surge chamber equals that of the static head above it during pressure transient is not always valid. The surge chamber generally reises the period of transient pressure wave in pipe system, reduces the maximum pressure envelope and lifts the minimum envelope substantially. The water level fluctuation in the surge chamber was numerically and experimentally observed. Increasing the size of the surge chamber and/or decreasing the initial air pressure in the surge chamber enhance the effectiveness of the surge chamber in suppressing pressure wave.