Unless, like Oz, you are in a high demand highly competitive situation, in a sales organization, then consider this: mentioning an offer shows that you are focussed on the money and in the short term, not the long term career potential at your employer.

I would only mention an offer after an honest effort to get a raise had failed, and only then if I was prepared to walk. To mention an offer while negotiating a raise could be seen as blackmail rather than leverage.

James