The problem with all that type of water heater is that once the hot tap is turned on sufficient flow must be maintained through the water heater to keep the main gas burner alight. If the heat adjuster is turned up to high, then the person using the hot water will turn it down to a low rate which means the main burner will turn off and result in cold water. Try setting the heat control to the lowest setting that still gives hot enough water. If you have a thermometer adjust control for a temperature of around 50 to 55 degrees Celcius. You may have to fiddle with fine adjustments to get the temperature and flow rates to maintain a constant output of hot water. You may still have intermittent problems. If the heater only supplies baths or showers you could set the temperatuer even lower (45 to 50) to ensure that the hot tap is used more than the cold which will maintain flow and therefore heat.
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