The stability of high-latitude plasma density enhancements (''blobs'') is analyzed with regard to the interchange mode (driven by neutral wind or equilibrium transverse electric field acting on the density gradient at the walls of the blobs). The effects arising from the finite parallel length of the blobs along the magnetic field lines are included in the analysis. Plasma regions of differing collisionalities, to which the blobs extend in altitude, are considered. We find that the finite parallel blob size results in a modest reduction in the growth rates of the small (≲1 km) and intermediate (1--10 km) scale sizes but severely reduces the growth rates for the large scale sizes (>10 km) for the observed parallel blob lengths (~300--600 km). Further, it is found that the instability growth rates show a moderate reduction at higher altitudes (where ion-inertial effects may be dominant over the ion-neutral collisional effects). Thus the E ¿ B instability is considered a plausible candidate for the scintillation-causing irregularities (1--10 km) associated with the high-latitude blobs. ¿American Geophysical Union 1987