Quantum hydrodynamics (QHD) theory for finite temperature plasmas is consistently derived in the framework of the local density approximation of the free energy with first order density gradient correction. Previously known results are revised and improved with a clear description of the underlying approximations. A fully non-local Bohm potential, which goes beyond all previous results and is linked to the electron polarization function in the random phase approximation, for the QHD model is presented. The dynamic QHD exchange correlation potential is introduced in the framework of local field corrections and considered for the case of the relaxation time approximation. Finally, the range of applicability of the QHD is discussed.
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