There are three ways to solve this problem: 1) you can give in and sleep with him; 2) he can accept a sex-free relationship with you and continue exploring the magical wonder of masturbation; or 3) you can break up.

Neither of you is wrong to want what you want; the problem is that you are together and your goals are incompatible. That's not to say that you can't work it out, but one of you will have to compromise. I think it should be him, but then, I lean a little old-school in these matters, and I tend to side with females, particularly when it comes to sex. I suspect that you are young, which is all the more reason to wait.

If you've just started dating and sex is already an issue, that's not a good sign. Prepare yourself for an onslaught of steady pressure from this guy for a while, if not for as long as you date. I know this because I was that guy once upon a time. I had my first steady girlfriend at 15 and would go to her house every day after school to "study" heh heh (she was a latchkey kid). What I was studying was how to get into her pants, but no matter how hard I pushed, argued, and begged her to go all the way with me, she wouldn't do it. The most we ever did was heavy petting, and I finally gave up expecting anything more. That took a lot of pressure off our relationship, and we dated for almost a year afterward.

In hindsight I'm glad that she held her ground, because neither of us was ready to go all the way. I also regret putting so much pressure on her, because even back then I knew she was right, but my loins were on fire.

You may not be young but it doesn't matter; if you want to wait for sex, wait for sex. Some might advise you to try other things to satisfy your desires -- petting, oral, etc. -- but I think that's a slippery slope (no pun intended) which just makes it harder (pun intended) to stop short of intercourse.

So, again, the solution is simple: he can give it up, you can give it up, or you can break up. If things continue as they are, it will only get worse.