This question is a bit different from this question: What to do if asked to write a letter of recommendation for a weak candidate?What to do if asked to write a letter of recommendation for a weak candidate?
Instead of not knowing the student well enough, I know the student too well that I think he is not a suitable candidate. I have a good relationship with the student, it is just that I know I cannot comment highly on this application as he lack one skill that is particularly important for that post... I have suggested to him to try something else but he seems to be very keen in applying for the post. I cannot turn down his request because he said he could not find anyone else (He need 3 references) I never read a poor reference before; how honest usually are people in writing them?
(He is not a bad student, and I have written him a good reference on another application before, so I do not want to write him a poor reference...)