A paranoid schizophrenic who beheaded an 82-year-old woman will be locked up indefinitely in a high-security hospital after being found not guilty of murder on the grounds of insanity.

Nicholas Salvador held Palmira Silva's severed head and brandished it at a police helicopter hovering over her well-tended garden in Edmonton, north London.

The 25-year-old believed he was killing "Hitler back from the dead" at the time, his two-day trial at the Old Bailey heard.

The gruesome killing took place on 4 September last year when Salvador went on a 45-minute rampage, armed with a machete and a wooden pole.

He was caught on CCTV beheading the elderly cafe owner and two cats.

Salvador believed he was killing "demons" when he ran amok, tearing down fences and kicking down neighbours' doors.

Police helicopter footage shows the great-grandmother looking at bare-chested Salvador over her garden wall.

After a brief exchange, the crazed killer vaults into her garden and stabs her repeatedly before hacking her head off.

The final moments of Mrs Silva's life and immediate aftermath were edited out of a 14-minute clip shown to the jury.

In the footage, an officer is heard saying: "He's agitated and lethal ... he needs taking out."

Children playing nearby were grabbed out of harm's way and passed through windows as the 6ft-tall maniac strode through gardens towards them.

Salvador was eventually cornered in a neighbour's house and Tasered six times during a violent struggle.

Afterwards, he mumbled phrases like "red is the colour" and "I am the king" over and over again.

Salvador, from Enfield, had denied murder by reason of insanity and his trial heard that two psychiatrists agreed he was suffering from paranoid schizophrenia.

He will be held at high-security Broadmoor Hospital for the rest of his life, unless doctors and the Home Secretary agree he is sane enough to be freed.

Before beheading Mrs Silva - who he believed was a supernatural being - he had become obsessed with "shapeshifters".

The skunk cannabis smoker had lost his job in billboard advertising three days before because of concerns about his strange behaviour.

Prosecutor Jonathan Rees QC told jurors there was no dispute that the correct verdict was not guilty by reason of insanity so Salvador could be treated and the public protected.

He said: "There is no issue between the prosecution and the defence and the evidence has emerged as we expected.

"This was ... a deeply upsetting and horrific incident. Mrs Silva was not targeted because of who she was. She just happened to be in the wrong place at the wrong time."

Bernard Richmond QC, defending, said: "It is one of the bitter ironies of this case that Mrs Silva was probably the least evil person you could think of."

He said her family conducted themselves during the trial "with a quiet dignity which is a tribute to both themselves and Mrs Silva".

Mr Richmond added: "It is plain also that when he is not unwell Mr Salvador is somebody regarded as a decent man.

"Mental illness, in whatever circumstances, can be terrifying for the person.

"And one of the things we have to bear in mind is that ... he will have to continue, as his mental state improves, coming to terms with the horror of what he did when he was unwell."

The need for a jury to formally decide the issue of insanity dates back to a 19th century law.

The jury took 40 minutes to decide Salvador was insane.

After the verdict, Mrs Silva's daughter Celestina Muis said her mother's death had devastated the whole family who "no longer feel safe".

Mrs Silva's granddaughter Christina Silva added: "Every day I wake up and replay the attack on my grandmother in my head.

"Since the attack I have completely changed from the person I used to be. The thought of being alone in the house terrifies me."