In this paper we develop a theory to calculate the solvent mediated interaction potential between solute particles dispersed in a solvent. The potential is a functional of the instantaneous distribution of solute particles and is expressed in terms of the solute-solvent direct pair correlation function and the density-density correlation function of the bulk solvent. The dependence of the direct pair correlation function on multi-point correlations of the solute distribution is simplified with a mean field approximation. A self consistent approach is developed to calculate the effective potential between solute particles, the solute-solvent and the solute-solute correlation functions. The significance of the solvent fluctuations on the range of the effective potential is elucidated. The theory is applied to calculate equilibrium properties of the Asakura-Oosawa (AO) model for several values of solute and solvent densities and for several values of the particles size ratio. The results give a quantitative description of many-body effect on the effective potential and on the pair correlation functions.