The woman is said to have been found at an address in North London just after 1pm today.
A 25-year-old man has been arrested on suspicion of murder following the attack in Nightingale Road.
Police rushed to the scene earlier today after receiving reports of a man with a knife.
The woman was pronounced dead at the scene and, although it hasn't been confirmed, there are strong reports suggesting she was beheaded.
Sky News reported: "They haven't confirmed that the woman has been beheaded, refusing at this stage to discuss the inures she's suffered.
READ: CANCER VICTIM SPEAKS OUT AFTER BEING FORCED TO PAY FOR £2K A WEEK TREATMENT
"But we are on very good sources reporting the fact the woman was found decapitated and police are certainly not telling us that we're wrong in doing that."
It is believed that a number of other people managed to escape the address without harm.
Simon Letchford, Metropolitan Police commander, said: "There were a number of people resident. What we do know is that this male has gone along a number of the back gardens of this premises.
"Officers who attended the scene have evacuated a number of those people from those premises to make them safe. During that period they distracted then man from carrying out further attacks."
Eyewitnesses told how they saw a man 'fighting' with the police, before he was detained by firearms officers with taser guns.