These are some tips I got from a great EFL site called About.com "Sometimes you need to say no when someone makes a suggestion, offers something or asks you to do something for them. Of course, saying just 'no' can be rather rude. Here are some of the most common ways to say 'no' nicely - or at least not rudely."
* Would you like to see a film tonight?
I'm afraid I can't go out tonight. I've got a test tomorrow.
* Why don't we have some Chinese food?
Sorry, but I don't particularly like Chinese food.
* How about taking a nice walk?
I'd really rather not take a walk this afternoon.
* Would you like to come to the museum with us?
Thank you, but it's not my idea of a fun afternoon out.
* Let's go for a drive
Sorry, I'm not really fond of driving for the fun of it.
* Why don't you stay the night?
That's very kind of you, but I really have to get back to the city.
NOTE: Notice how we often say 'thank you' in some way before refusing the offer. When someone makes an offer it is polite to first thank that person and then say no, often offering an excuse for not wanting or being able to do something. Just saying 'no' is considered very rude behavior indeed!
For more on this and for a quiz, go to: http://esl.about.com/library/grammar/blgr_sayno.htm
Photo: by b_d_solis