Break ups are always awkward. There's no way to prevent that. But if you want to not hurt his feelings then say that he's a nice guy but you aren't looking for a relationship right now. Or lie and say that your parents don't want you having a relationship. Best of luck.
Tell him you are focusing on becoming a strong independent woman and need time to figure out who you are without influence of someone else. Say it's nothing against him, you just need some time to become you and feel secure and established and independent before you can think of anyone else
Truthfully I don't think there is a nice way to break up with anyone. Its always hard and I think the best thing you can do is tell him the truth, especially if you like someone else because if he sees you with another guy right after you broke up he is definitely going to be hurt. He may even start trouble...
Give him a note. That's what I'd do. Drop the bomb immediately though, like don't sit there "You're a great guy" blah blah blah, just say "I think we'd be better off friends" and then tell him why. Don't leave him in the dark about why, because then it'll be even more awkward than it needs to be.