How to tell a girl that you want only to stay as friends?

I thought cuddling was something only people who are in a relationship do. I guess I'm more out of touch with social norms than I thought.

By the way, I didn't mean sleep as in sex, I just meant sleeping with each other in the same bed cuddling together.

You're entirely off on 'cuddling'. Cuddling can be done if two people are not dating, friends can do that. At least, it's pretty damn normal here. I cuddled with a couple of girls that were close friends, but we're not dating. Also, when you meant 'sleeping', instinctively, my reaction was of course 'intercourse', so I responded in the sense that you meant so.