The linear and quasilinear theories of lower hybrid waves in a finite-&bgr; inhomogeneous plasma with electrons streaming parallel to the magnetic field are examined. These waves are found to be unstable for very low-&bgr; and to be stabilized in finite-&bgr; plasmas. The quasilinear feedback of unstable waves is shown to result in heating of ions perpendicular to the equilibrium magnetic field. Thus, unstable lower hybrid waves may play a role in producing ion conics in the auroral zone, and in heating ions in the solar plasma.