Most Helpful Girl
You both know the arrangement your in, so it's no a relationship, so it shouldn't be that bad if you both know how it is, but be clear and honest - you want to end your arrangement because you've met someone you like and want to pursue a relationship with, you don't disrespect this girl you've been sleeping with and you hope she doesn't feel disrespected or that you gave her the wrong impression (but allow her to be emotional if she did misinterpret), but you no longer want to continue. Be clear, honest and quick is the kindest thing to do. It's not okay to lie or make some lame excuse, but if you drag it out and over-explain she might thing you don't really want it to be done, so keep it simple.
Most Helpful Guy
I had to do this once, all I did was a reality check that I wasn't looking for anything more. and it worked out great, stayed friends with benefits.