12 yr old DD told me tonight that she wants to lose weight

I would try to engage her in shopping, meal planning and meal preparation. I would educate her about healthy choices. I would make sure that the food in my home supported her success. I'd have her help me clean out the pantry to get rid of things that are over-processed, high-calorie, high-fat, etc.

You have an opportunity to help her establish a foundation of good eating that she will build on for the rest of her life. Drinking water and exercise are important, but a lot more goes into healthy eating.

5'4" and 130 seems like a healthy weight to me- I know at 13 there is a huge range and she may have 80 pound, 4'10 friends. If she doesmt exercise then that is important, but as far as actual numbers, is she overweight? I have a hard time imagining she is at that height and weight. What I mean is, be careful of her thinking she can diet her way to being prepubescent like some of her friends might be, or diet her way to being a short, small boned girl- if it isn't her body type, it just isn't. And those slight, prepubescent friends will change drastically in the coming years, she has just already done it.

My oldest was a chubby 12-14 year old, and then Started thinning out. Now at just turned 16, she has a beautiful figure and I am glad I never expressed any concern or fed into issues she may have had at 13. It's a time of so many changes and so much upheaval, better to wait and see what the "forever" body looks like...and that is a ways down the road. If she is eating well and getting exercise, I'd encourage her to let her body just be for a while until it gets through all these changes.

Things like that feel like denial.  Denial tends to make you crave it more and you end up gaining back more than you lose.

How about exchanging complete denial for a few tricks/tips when she does feel like snacking?  I don't know what she likes to snack on, but get a very small bowl (maybe just up from a pinch bowl size) or a box of those snack-size baggies (which are about 1/2 the size of a sandwich bag) and put the snacks in there.  Metering, rather than total denial, gets much better results, IME.  If I decide that a set amount is my limit, I tend to draw it out and make it last longer than when a whole bag of chips or a big bowl of popcorn is sitting in front of me.

Another trick I use (and it mostly works, not always) is to ask myself "What size of a portion or, what would a thin person eat?"  Well, maybe that would be 1 cookie instead of 2 or a small piece of cake instead of a large one or a regular McDonald's burger instead of a Big Mac.  Just apply it to whatever you find tempting at the moment.  

Experiment.  The only fruit that I find that satisfies my craving for unhealthy sweets is fresh pineapple chunks.  Sure, it's loaded with natural sugar, but it's still healthier than a piece of cake. Maybe it's peaches or something for someone else.

I always wanted to punch the person who suggested celery instead of chips or popcorn.  That was about as satisfying for that craving as drinking water.  Try either portioning or something a bit healthier like Bear Naked Granola. Filling, flavorful, and crunchy.

And lastly, don't count calories. 

Perfectly said! 

Because there is a component of comparing her self to other girls in her class I would start with a session of measuring her height then searching for some health tables to see what someone her age and height is expected to weigh in the healthy weight ranges. Explain to her that at 12 a lot of her classmates are still in children's bodies, some have reached their adult bodies faster and she may be somewhere in the middle or be one of the early ones to arrive into her adult size. 

After that, determine healthy eating habits (fruit instead of candy, leafy greens instead of some carbs and self monitoring of the snacking)  Since she thinks a lot about food maybe it is time to get her involved in menu planning and meal prep to a larger degree.

Help her set some easy to achieve goals for the next month. Things like 30 minutes of exercise, 5 times a week and hang a calendar to check it off. Things like trying a new veggie/fruit every week for a month. Coming up with a healthy meal and helping to shop and cook for it. By setting the easy goals you encourage her to be healthy, versus weight loss, quick goals lead to keeping the changes and at the end figure out new goals.

I think a nutritionist is a good idea and be sure to stay quietly vigilant about her habits. A friend's daughter a couple of years ago started like this and within about six months she was diagnosed with anorexia. No adult would have thought she was even slightly overweight but in her mind she was. This wasn't a situation where the family in general had any weight problems. My friend's family eats very healthy with mostly vegan dishes but not totally vegetarian. Her oldest daughter became focused on eating even more "healthy" or what she thought was healthy anyway and started doing lots of exercise to lose weight. She started keeping track of every single bite of food she put in her mouth and became obsessed with how many calories were in every little thing she ate.

Anyway, my friend was smart enough to watch her daughter and get her the help she needed in time to save her life. I am not trying to be an alarmist and I am sure this is on your radar already but wanted to give you a personal story to think about.

I like the walk idea. In an attempt to get me moving, I do a lot of Just Dance for the wii. The kids always join in.

I definitely agree with. Talk to her about processed foods versus whole foods. This could make a positive difference in your whole family.

Also, avoid the use of the word diet. This is a healthy lifestyle change.

Find out how much weight she wants to lose. Five to ten pounds will make a big difference in the way she looks.

If my daughter came to me with this, there a few things I'd do;

not use the word diet
not subscribe to any kind of diet with a name (atkins, etc.)
start with fluid intake and determine healthy choices regarding what she drinks
take it slowly and not bombard her with info, planning, etc.
baby steps so she doesn't feel overwhelmed, hungry, or like she's missing out on yummies
look at my family eating habits as a whole and make global changes as needed to demonstrate support and love

Your daughter is a healthy body weight, based on BMI, probably a BMI of 22-23. healthy BMI is 18-25. Over 25 is considered overweight, above 30 is considered obese. Now a girl that has a BMI of 18 will look much skinnier, but your daughter is still well in the healthy range.
I would look at just a healthy diet-lots of fruits and veggies, don't snack on too much chips, high fat food. Avoid empty calories, esp. In sweet beverages like soda. Go diet or water, ice tea.
If she doesn't exercise on regular basis, now is the time to start. Walking is the best way to start. At 12 it is certainly healthy to start light weight training if she wants, which may develop more muscle tone. She will look leaner due to the muscle tone. So your appearance isn't just about weight. For kids this age, it's about how they look, usually they are comparing themselves to someone else. Another way is start some type of yoga/Pilates class which involves a lot of core strengthening.
It's not about weight, but about being toned and fit. Dieting will never get you toned and fit, but exercise will.

I don't necessarily agree with this. She is a kid. Do not make this about scrutinizing every little thing that goes into her mouth, even quietly.  She will pick up on it.  Let her make the decisions. My dd's best friend was skating towards the olympics until she turned 14 and her coach told her she was too fat and every girl around her had an eating disorder. She is totally muscle, no fat on her. She quit skating and now dances but wants to become a nutritionist and work with student athletes that have eating disorders.

This girl was so obsessed about everything going in her mouth but when her parents or coach wasn't around, she couldn't stop eating. My dd stepped in and talked to the counselor and got her help.