The quote can be found in:
John Wesley, A Preservative Against Unsettled Notions in Religion, p. 146-150, as quoted in Millennial Harbinger, Volume 1 by William Kimbrough Pendleton and Theological Writings on Various Subjects by Peter Nead.
I believe both authors gave a reduced form of what Wesley stated. I couldn't find Preservative on-line to pull a full quote, but I did find a more complete quote:
Is the objection made by Methodists? And what stress is placed upon the institution by them? Hear the celebrated John Wesley, the founder of Methodism. "By baptism, we, who were the children of wrath, are made the children of God. And this regeneration, which our church in so many places ascribes to baptism, is more than barely being admitted into the church, though commonly connected therewith. Being grafted into the body of Christ's church, we are made the children of God by adoption and grace. By water, as the means, the water of baptism, we are regenerated, or born again; whence it is called, by the Apostles, the washing of regeneration. In all ages, the outward baptism is a means of the inward. Herein we receive a title to, and an earnest of, a kingdom which cannot be moved. In the ordinary way, there is no other means of entering into the church, or into heaven. If infants are guilty of original sin, then they are proper subjects of baptism, seeing, in the ordinary way, they cannot be saved, unless this be washed away by baptism."
[The Modes and Subjects of Baptism by Milo Parker Jewett (1839)]
Also, there are other works to be considered as well.
In John Wesley's 25 Articles of Religion, Article 17, "The Rite of Baptism" near the end:
In conclusion I would like to quote from the writings of John Wesley concerning Baptism ... "What is baptism? It is the initiatory sacrament, which enters us into covenant with God. It was instituted by Christ, who alone has power to institute a proper sacrament, a sign, seal, pledge, and means of grace, perpetually obligatory on all Christians. ... The matter of this sacrament is water; which as it has a natural power of cleansing, is the more fit for this symbolical use. Baptism is formed by washing, dipping, or sprinkling the person, in the name of the Father, Son and Holy Spirit, who is hereby devoted to the ever-blessed trinity. I say, by washing, dipping or sprinkling; because it is not determined in Scripture in which of these ways it shall be done, neither by any express precept, not by any such example as clearly proves it. ... By baptism we enter into covenant with God ... By Baptism we are admitted into the Church, and consequently made members of Christ, its head. The Jews were admitted to fellowship by circumcision, so are the Christians by Baptism. We read in Galatians 3:27, 'As many as are baptized into Christ," (in His name) "have thereby, put on Christ" (that is, are mystically united to Christ, and made one with Him. (See I Corinthians 12:13 and Ephesians 4:12).
From John Wesley's Treatise on Baptism
The matter of baptism is the water which has the natural power of cleansing and hence is fit for its spiritual use in cleansing. [page 188]
By baptism, we enter into covenant with God; into that everlasting covenant ... we are admitted into the Church, and consequently made members of Christ, its head ... we who were 'by nature children of wrath' are made the children of God. [page 191]
By baptism we who were by nature children of wrath are made the children of God And this regeneration which our Church in so many places ascribes to baptism is more than barely being admitted into the Church though commonly connected therewith being grafted into the body of Christ’s Church we are made the children of God by adoption and grace This is grounded on the plain words of our Lord Except a man be born again of water and of the Spirit he cannot enter into the kingdom of God John iii 5 By water then as a means the water of baptism we are regenerated or born again whence it is also called by the Apostle the washing of regeneration Our Church therefore ascribes no greater virtue to baptism than Christ himself has done Nor does she ascribe it to the outward washing but to the inward grace which added thereto makes it a sacrament Herein a principle of grace is infused which will not be wholly taken away unless we quench the of God continued wickedness.
… And the virtue of this free gift the merits of Christ’s life and death are applied to us in baptism. “He gave himself for the Church that he might sanctify and cleanse it with the washing of water by the word;” Eph. v, 25, 26; namely in baptism the ordinary instrument of our justification. Agreeably to this our Church prays in the baptismal office that the person to be baptized may be washed and sanctified by the Holy Ghost and being delivered from God’s wrath receive remission of sins and enjoy the everlasting benediction of his heavenly washing …
John Wesley's Notes on the Bible [I Peter 3:21]
The antitype whereof - The thing typified by the ark, even baptism, now saveth us - That is, through the water of baptism we are saved from the sin which overwhelms the world as a flood: not, indeed, the bare outward sign, but the inward grace; a divine consciousness that both our persons and our actions are accepted through him who died and rose again for us.
Thank you so much for your reply. I appreciate your help. It baffles me to no end when people, like Namaan, argue about the water in Jesus name for the remission of sins (Acts 2:38), along with the multitude of other scriptures. They seem to fear a man-made work even though it was instituted by God Almighty Himself. How do people believe they are pleasing God when they are directly disobeying Him? I just don’t understand!
Sadly, for most people, proving themselves to be right is more important than proving what God said is right. "For the time will come when they will not endure sound doctrine, but according to their own desires, because they have itching ears, they will heap up for themselves teachers; and they will turn their ears away from the truth, and be turned aside to fables" (II Timothy 4:3-4).