Stability equations for axisymmetric compact toroidal configurations without a toroidal magnetic field are derived in a variational form. The application of a particular ordering procedure gives equations which include the coupling of geometry to finite Larmor radius as well as including resonant ion effects. The equations are readily obtained by applying the ordering assumptions to a variational dispersion functional form of the Vlasov‐fluid equations. Application of the dispersion functional to find necessary and sufficient conditions for stability are made for the case of small, but finite Larmor radius and for the case of zero Larmor radius. The mathematical result that the zero Larmor radius case is more optimistic is physically understood in the context of an interesting stabilizing mechanism involving parallel kinetic effects.