Originally posted by: kranky
Direct and straightforward is the best way.
"I have been offered another job that pays a lot more so I'm giving my two weeks notice. But I am very thankful that you gave me this opportunity to work with you."
Frankly, if she offers to match the pay, I'd turn it down. All that means is that she was taking advantage of you all this time. Of course you can't say that, but just say that you are ready for the next stage of your career, to grow more professionally, and that's a large part of the reason you're moving on.
You're afraid to tell her because you see it as saying "I don't want to work here any more". Don't think of it that way - you are taking another opportunity, with a chance to further develop your skills. It is no reflection on where you are working now.