A compact solid source of hydrogen gas, where the gas is generated by contacting water with micro-disperse particles of sodium borohydride in the presence of a catalyst, such as cobalt or ruthenium. The micro-disperse particles can have a substantially uniform diameter of 1-10 microns, and preferably about 3-5 microns. Ruthenium or cobalt catalytic nanoparticles can be incorporated in the micro-disperse particles of sodium borohydride, which allows a rapid and complete reaction to occur without the problems associated with caking and scaling of the surface by the reactant product sodium metaborate. A closed loop water management system can be used to recycle wastewater from a PEM fuel cell to supply water for reacting with the micro-disperse particles of sodium borohydride in a compact hydrogen gas generator. Capillary forces can wick water from a water reservoir into a packed bed of micro-disperse fuel particles, eliminating the need for using an active pump.