The transverse instability of counterpropagating waves in nonlinear media with a photorefractive or Kerr-type nonlinearity is studied. The problem is formulated for a sluggish nonlinear medium that responds much slower than the optical frequency. In this limit, a general dispersion relation, valid for arbitrary longitudinal variation of the optical intensities, is obtained and solved numerically for several representative cases. It is found that, while photorefractive media provide sufficient nonlinear coupling for the observation of transverse instabilities, such observations may be difficult due to the presence of strong amplified incoherent scattering (fanning) in photorefractive media