We deduce a complete wave propagation equation that includes inhomogeneity of the dielectric constant and present this propagation equation in compact vector form. Although similar equations are known in narrow fields such as radio wave propagation in the ionosphere and electromagnetic and acoustic wave propagation in stratified media, we develop here a novel approach of using such equations in the modeling of laser beam propagation in nonlinear media. Our approach satisfies the correspondence principle since in the limit of zero-length wavelength it reduces from physical to geometrical optics.