This study establishes effectiveness of vaned diffuser in comparison with vaneless diffusers in centrifugal compressor. Hot wire measurements at three inter-vane positions for mean velocity, turbulent kinetic energy and flow angle distributions in vaneless space and vane region of a low speed centrifugal compressor are presented. A low speed compressor with a 19 bladed backswept impeller and 16-wedge vanes diffuser was used. The flow entering diffuser closely resembles classic jet-wake flow characteristic of centrifugal impeller discharges. A strong upstream influence of diffuser vanes, which resulted in significant variations in flow quantities between vane-to-vane locations, was observed. Circumferential variations due to passage and blade wakes rapidly mixed out in vaneless space, although some variations were still discernible in vaned region. Impeller blade wakes mixed out rapidly within vaneless space than in an equivalent vaneless diffuser. Although, flow is highly non-uniform in velocity at impeller exit, there was no any separation from diffuser vanes. Presence of vanes accelerated mixing out process. Therefore, use of twisted vanes in diffuser would be beneficial in reducing losses.