How Do I Tell My Wife that She is Getting Too Fat to Be Sexually Desirable?

Before I go on, let me say that I love my wife more than anything and wouldn't dream of cheating on her or leaving her even if she ballooned up to 300 pounds. Having said that, my wife has put on around 40-50 pounds since we got married four years ago. To make things clear, she hasn't had a baby and she is only 27. She simply has gone into "I know that my man isn't going anywhere, so I can let go" mode. The problem is that she is now not my "type" anymore in terms of body type. I have absolutely no desire to see her naked and I have pretty much stopped initiating sex. We still have sex regularly, but she is almost always the one that initiates it. She is starting to catch on that I am not initiating sex anymore, so she is questioning me as to whether I think she is sexy or not, etc. I know that women have a need to be desired, and I would like nothing more than to satisfy this need. However, I am not a good actor/liar and whenever I try to initiate sex to make her happy (feel desired) it comes across as half-assed. I'll say it again, I love her more than anything, but men become "excited" with their eyes, not their hearts. I don't dare say that she has gotten too fat, as I have hinted with no success in the past (i.e., "why don't you exercise a bit...etc."), only to have her get defensive. What should I do?

As a side note, we have a home gym, an exercise bike, and a Wii Fit (that she "HAD" to have in order to exercise). She simply doesn't use them even after I prod her a bit. I also have tried to get us to eat healthier, but she snacks after we eat our healthier meals.