A clean cut differentiation between the two is one explained by Robert Cialdini

In a world where its inhabitants have diverse beliefs and point of views, it is usually difficult to influence others to change their perspectives; hence, man resorts to persuasion or manipulation to achieve this end. Persuasion and manipulation are two different concepts that are more or less synonymous, but it is in their little differences that we are able to know better these two terminologies.

It is said that “manipulation aims at control; not cooperation. It always results in a lose-lose situation. Persuasion, on the other hand, always builds the self-esteem of the other party. It treats the other person as a responsible and self-directing individual (Swets, 2006).” Thus, control is the basis of manipulation, while cooperation is that of persuasion.

Manipulation, in order to be done, is complemented with the use of coercion and deceit just to influence a person to do something. On the other hand, persuasion tries to influence people up to the extent necessary, but not crossing into the unethical aspects of influencing people. It tries to get people to agree to certain things on their own decision.
A clean cut differentiation between the two is one explained by Robert Cialdini (2005), a psychologist. He said that manipulation involves the unethical use of the principles of persuasion and some of those involve brute force or coercion to achieve a goal.
Persuasion involves the use of principles that exist in the situation and that allow us to inform people into yes, to educate them into yes, by giving them a view of reality as we see it. It involves moving them in a direction that we desire, on the basis of valid information.
Thus, it is suggested that persuasion must be resorted always rather than manipulation because the latter tends to lean on the negative side. Persuasion is a civilized way of influencing people.
References:
Swets, P. (2006), ‘The Art of Talking So That People Will Listen’ in Burg, B. (2006). Persuasion…or Manipulation: Are They Different Things? [webpage]
http://hodu.com/compliments.shtml
Date accessed: 4 April 2007.
Cialdini, R, (2005), The Psychology of Persuasion [webpage]
http://www.journalofbusinessstrategy.com/articles/RobertCialdini.shtml
Date accessed: 4 April 2007