A Serious predicament! Should I get back with my ex after all this?

The Background:

I started dating a girl around 3 and a half years ago, the relationship was very hard as it was long distance, she lived 4 hours away from me but that didn't matter because I loved her more than anything. For 3 years I travelled once a month to her home town to see her, for the first 12 months all was well.

After the first 12 months I began seeing a slight change in her, after being in a relationship for around a year she decided to block me on Facebook and tell me she had deleted it, along with my closest guy friend (this was silly because she still had all of my family on Facebook as well as my brothers and sister and mother) but I just left it as im not the argumentative petty type. Then I began seeing her hide her phone or she would never answer it while I was around she wouldn't even hold my hand properly in her own city (in-case she got spotted I suppose). Once again I turned a blind eye to it because I really didn't want to get into an argument about it because I trusted her 100%. I loved this girl very much and there is nothing I wouldn't do for her while she was at college her phone got stolen so I went out and bought her a brand new which at the time was very very expensive, her laptop blew up but her parents couldn't afford a new one before her exams and I went and bought her a brand new one which again at the time was one of the best as I didn't want her to have any more set backs, if we went shopping she could have anything she wanted ( now ill be honest, im an ordinary working lad who was in love) there is nothing I wouldn't give her and whenever we went out, from our first date to our last outing... she has never paid for one thing. I treated her like a princess and loved her as much as I could. Not only that but every Christmas/birthday I would buy her whole family presents, go up to see them. Valentines day I would spoil her rotten. Basically im trying to say I looked after her like royalty and treated her whole family the same.

The issues:

I mean, everyone argues but these days we seemed to be arguing more than usual and I found myself being unhappy and complaining to my other best friend (who by the way was a girl) but my girlfriend really didn't like her AT ALL!! but I told my girlfriend that we had been friends long before we met and she is going no where so stop complaining. Nothing had ever happened between me and this girl before you as... So months past and we kept having our private issues. Anyhow it was all looking up when she chose to go to university in London, now I had just moved to London to work so it was great that we would be in the same city and be able to enjoy each other properly without her family being around, Anyway the problem began when her father for some reason decided to threaten me because I never asked if his daughter ( who is a grown girl by this time) could come and see me (He had issues!) both her mum and her and the rest of the family were on my side and said he was wrong and eventually he called me and apologies for threatening to kill me if i came near his daughter again (it seems to me that some people don't remember kindness) but still I stayed with her because I loved her, But things got rough with me as money began to run out as I lost my job and just started afresh in London and there were times that I never had a dime to get over to her side of the City but I couldn't tell her that. So eventually I sat down with her and told her all that was wrong and I could see how hurt she was in her eyes and it hurt me, I have never seen her so broken but I knew I had to break up with her because I was just not happy with how everything was, I couldn't see a way to go forward.

The Serious Issue:

After breaking up with her we decided to try over but things were tough, I couldn't afford to come and see her, couldn't afford to go out and so it was just the same old cuddling in bed in her dorm every time I saw her for about a month after and eventually we said its not working and we just said lets be friends. As of then you know, the usual stuff happens, late night thinking and texts saying I miss you but that's normal right?

So here is my dilemma now. 6 months down the line me and her haven't got back together but we did still talk, so you remember the girl I mentioned earlier, my best friend? she declared her feelings for me and I said to her okay lets try it out and see how things go, she got very excited and the news spread quickly through her telling her friends and family that we were together, everyone was happy for us and glad we were together because we have always been close, a month down the line she tells me she loves me. Me not wanting to say it back but in a position where I have to, said " I love you too" BAD MOVE!, because 3 months later I know realise it was a mistake! but how do I get out of this without ruining the friendship we had before, I do love her but only as a friend she is a great friend but I cant get passed that! I find kissing her difficult, there is no physical attraction, its literally just friendship.

And the more that I am with her its the more I feel like I need to break up with her because the reality is I still love my ex, and I know without a doubt she still loves me. I do not stop thinking about her, she still gives me butterflies when I think about her, I don't stop thinking about how much I just want her back, Even though I wasn't so happy while I was with her I was a lot happier than I am now. Everyone tells me not to go back to her because she just took advantage and never knew what she had, my fear is people and my family thinking im an idiot! Losing my bestest friend and falling into the same problems I was in before.

We haven't been together since November 2013 and now I'm beginning to realise what I have let go even if she didn't treat me the best she was everything to me.

How do I break up with this girl and remain best friends?

is it even possible to do it gently? without hurting her too much because she is soooo in love with me I feel like crap about it.

I don't want to regret my mistake for the rest of my life so....

Should I follow my heart and go back to my ex?

I really don't know what to do, I cant even sleep properly and when I do as stupid as it sounds I dream about me and my ex! and I wake up everyday feeling more depressed about the matter.

I hope all of that made sense and better yet I hope I can get some good advice (sorry about the long essay)

All help appreciated!