With my mother, it took a discussion with a doctor. I'd managed to get the keys away from her "temporarily", but she kept asking for them back. So there she sat in the doctor's office, in a wheelchair and clutching her oxygen tank, demanding to know when she'd be well enough to drive again. Standing behind the doctor where Mom couldn't hear me, I murmured, "Blind in one eye, no depth perception, bad reflexes..." Without missing a beat the doctor said, "Well, Helen, you know you are blind in one eye, which means you don't have any depth perception, and your reflexes aren't quite what they used to be...."
Bless that man! All the way home Mom exclaimed, "Well, I just can't believe I won't be able to drive again!" But she had immediately accepted from a young doctor the same information I, her middle-aged daughter, had been telling her for weeks.
Excellent story. I think you're right, it is often easier if it comes from someone outside the family, especially somebody who's sort of an authority figure. Otherwise I think it can often become a contest of wills which the elderly person feels he can't afford to lose.