The lower hybrid instability is studied in the perpendicular bow shock geometry including finite beta effects and an electron temperature gradient. The flute (k∥ =0) mode, which for constant electron temperature is stable at the shock, is destabilized for sufficiently large temperature gradient (&Egr;T&rgr;i >1). Numerical solutions are presented for cases in which the ion distribution is either a drifting Maxwellian or consists of two Maxwellians to represent the effect of reflected ions at the shock. Implications of the results concerning ion and electron heating and electron acceleration at the bow shock are also discussed.