The effect of parallel electron dynamics is incorporated in the study of the Varma mode, which is a flute-like electrostatic ion drift perturbation in an inhomogeneous magnetic field. Starting from the electron and ion continuity equations, an equation for the conservation of the ion magnetic moment, the generalized Ohm's law, and Faraday's and Ampère's laws, we derive a set of four nonlinearly coupled differential equations. The nonlinearities arising from the E × B0 convection of the density and magnetic-moment variations, nonlinear ion polarization drift and Lorentz force, and the coupling of the parallel electron flow to the perturbed magnetic field are included. In the linear limit we find that the Varma mode becomes coupled with the modified-convective-cell and Alfvén modes. The instability of the coupled system is analysed and an expression for the growth rate is obtained. In the nonlinear regime we present the localized dipole vortex solution of the coupled Varma and convective-cell modes as well as the coupled Varma and Alfvén modes. It is found that for the former case the nonlinear structure is a solution of a second-order partial differential equation, whereas for the coupled Varma and inertial Alfvén waves the dipole vortex belongs to a family of fourth-order differential equations. Our results can be useful in understanding the electrostatic and electromagnetic fluctuations in mirror reactors, tokamaks and astrophysical plasmas.