Diane Williams, 28, an accounts clerk, was killed after fleeing her home in Harehills, Leeds, West Yorkshire. Mark Crawford, 23, a friend, was also stabbed inside her home and was said to be seriously ill in the city's St James's Hospital.
Said Bacht, 24, and his wife Deborah, 33, who live next door to Miss Williams, saw her being attacked by a man who chased her from her house. 'It was horrific. It was like he was trying to cut her head off like she was a chicken,' he said.
The couple said they had earlier heard the sounds of a row and a window being broken. 'We looked out of our bedroom window and saw the woman running down the street wearing just a pink dressing gown,' Mr Bacht said. 'We threw some clothes on to go after her but a man came out of the house and chased her with a knife. It had a long blade - it must have been a foot long and curved.
'I dashed round the corner and he was on top of her on the ground slashing at her throat.
'He must have hacked at her about four or five times. I picked up a road sign which some workmen had left and told him to get off her.
'But he stood up and threatened me with the knife and said 'Come on then'. Then he just sauntered off as if he didn't have a care in the world.'
Mr Bacht, a baker, added: 'I haven't stopped shaking since and I just can't get the picture of her dying out of my mind.'
Mrs Bacht, a sales assistant, said: 'I was just stunned. It was a horrible thing to witness and I'll never forget it.'
A man was being questioned last night after giving himself up to police.