verbal agreement to convert masters to PhD but reconsidering I am currently doing a Masters of Philosophy, with my key interests being ecology and evolution. 

When I enrolled earlier this year, I had an agreement with my professor that I would continue to a PhD. Unfortunately in the first two months, my first project fell through to lack of funding. My professor then showed me another project I could do. This project is very similar to my honours research...in fact, it is almost exactly the same, with very few new techniques included. I had a few weeks to think about if I wanted this project, but did feel a bit of pressure to make a decision. I decided to continue with this project despite my reservations. 

My main issue now is that I have realised (at 5 months) that this project, while interesting, isn't going to get me a job when I finish. While I am doing some lab based work and doing some phylogenetic analyses, I'm not doing any of the field work or statistical experience that I need to be competitive for post-docs. 

I've considered reworking my project, however I've had a number of concerns about it. First of all is that my supervisor doesn't seem keen to rework it to a large extent and doesn't seem to understand the time it takes for me to read and analyse papers to determine how to change my project.
The second issue is that no one in my lab is an ecologist, statistician or evolutionary biologist (primarily genetics and bioinformatics) and I will not be able to get the support I'll inevitably need down the track. The final issue is that I am getting no funding. My supervisor is paying for my labwork, but I am not able to conduct more field studies or more complex genetic analyses because we can't afford it. 

I've sort of come to the realisation that this isn't what I want from a PhD. The only issue is I have a verbal agreement to change to a PhD at 1 year into my masters. I love my supervisor and the lab, so don't want to burn bridges by changing my mind on them. I also feel guilty as my supervisor is paying for my lab work, and I don't want to put him out. I am just stuck as to what to do in this situation, and how to bring this up with my professor without ruining my chances of working with them later or affecting my relationships with them.

Basically, this can be summarised as: I don't want to do this PhD project and would like to keep it as a masters, but am not sure how to go about discussing this with my supervisor, and am not sure how it would impact me if I decide to do a PhD in the future. 

Has anyone been in a similar situation and can offer advice? Is there a way to do this without impacting my career as a researcher, or my relationships with my lab mates and supervisor? 

I would love any advice you have on this because it's really distressing me! 

Thanks
I don't want to do this PhD project


If you don't want to do this project, DON'T DO IT. PhD is not everyday fun and it is sometime harsh to keep motivation through the ups and downs.

About your adviser, I will not be too worried for him/her burning bridge. How many PhD student actually drop during the PhD. As Nate Eldredge said, It is quite bad for an adviser/group to have an unmotivated student. Moreover you haven't yet start the PhD. It will be much worse for you adviser if you start and quit after 2 years because you cannot stand it anymore.

As often, you should just be frank with your adviser. Explain this is not the project you are ready to invest 4 years in your life and if he/she has a minimum understanding, it should be fine. If you are not at ease, do it in several discussions, where first you express your doubts on the current project. I think any adviser hearing that should actually advise you to not continue with a PhD.