I would come right out and say so, as everard69 said, make it clear that you can only offer friendship because you just don't feel any attraction to her in any other way. If she has no problem with being friends, you have made your point without being too blunt about it and hurting her.

If she won't take no for an answer, you might have to be a bit more harsh about it. Sadly, some people won't take no for an answer unless it's delivered in a painful way. The next step would be to tell her that you don't want to be nasty about it but she is forcing you to do so. That should be enough to make her back off before she hears something she would rather not hear from you.

If you leave it, she might interfere with your relationships if she sees you around town with another woman, jealousy can make people do crazy things. The last thing you want is to find the perfect woman and have this jealous little girl ruin it for you.

You can be indirect while still taking a direct route. That's why I suggested the warning to her, that you will get a lot less diplomatic about it if she doesn't back off. If that doesn't work then she is giving you permission to hurt her as far as I am concerned.

You can be harsh without resorting to insults though. Telling her that she's not your type so you would never date her is better than telling her there's not enough beer in the world to make her look pretty, (even if it was true )