@sarah walker ,
Sarah, I have to tell you the truth. I think you must tell her, and I think the friendship is already dead, because how can you have a friendship when one of the friends doesn't really exist?
That girl is innocently believing that you're her BFF, and you aren't. You're someone she doesn't know. Your consoling hugs have an added sexual aspect that is unfair to her. Your advice is tainted with a secret desire to wind up with her. She COUNTS on you to be honest with her - to base your comments on what is best for her. You may not even realize that any normal person in love with their BFF is going to many times consciously, but always subconsciously, choose their comments, actions, and behavior to bring that person where they want her to be in their life, rather than where that person needs to go for her own happiness.
Also, I was naked around my BFF all the time - and if I thought for one moment she was looking at me sexually, my world would rip in two. That is WRONG.
You owe it to her to tell her the truth so she can make an informed decision about what to do. I think keeping silent about your sexuality - and more so, your attraction to her - is abusive.
On the other side, you also owe it to yourself to tell her. I can't imagine keeping something as intrinsic about who I am a secret from my BFF. If my best friend doesn't know my sexuality, who does? Are you totally all in the closet? Get out and breathe, girl.
But, whether or not you plaster the rainbow across your face to the world - you owe that girl the truth.
I mean, there is a chance she'll amend the relationship somewhat to keep the friendship in some capacity. There's a small chance she might say - hey, lets explore sex together. There's also a chance she'll slap you, scream, and tell everybody. (Hope she won't do that.)
Anyway, tell her or break off the friendship unless you want to be guilty of being creepy.
btw, I find it difficult to believe she doesn't know you're a lesbian. 80% of interaction between teenaged female BFFs is focused around dudes; sad but true. She might already know unless you've created a pretty merkin-rich fantasy life.
Good luck.