Jennifer Mills-Westley, 60, who has five grandchildren, was slain in a supermarket in Los Cristianos on Thursday morning by a man who stabbed her repeatedly.
He then decapitated her and, according to witnesses, ran off with her head along Avenida Juan Carlos saying "God is on earth".
Tonight Ms Mills-Westley's family paid tribute to her and said they were devastated by her death as it emerged that the killer may have been following her.
Her daughter Sarah said: "Mum retired a number of years ago and was fully enjoying her retirement travelling between Tenerife and France where she spent time visiting her daughter and grandchildren, and her other daughter in Norfolk.
The suspect was named in reports as Deyan Valentinov D - with Spanish police only providing the first initial of his surname.
He is believed to be 28 and a homeless Bulgarian with a police record.
It is thought he had previously received psychiatric treatment, with regional newspaper La Opinion reporting he was released from a local hospital in February after being involved in violent incidents.
He obtained a knife from inside the store before launching the frenzied attack inside Valdes shopping centre, it is thought.
A British Foreign Office spokesman said the victim's relatives were being helped by consular staff who were also liaising with the Tenerife authorities.
Police are investigating the man's movements leading up to the killing and studying CCTV and witness statements to establish precisely what happened.
They are also investigating his background to find out if he had been treated on a psychiatric ward and the terms of his release.
Initial reports suggested the murder was random with no relationship between killer and victim.
But tonight, the Tenerife and Canary Islands website newsinthesun.com reported eyewitness accounts that a tearful Ms Mills-Westley earlier sought refuge from the killer, who had been following her.
It was claimed she entered an employment centre not far from the shopping centre and a security guard sent the man away.
Minutes later she was dead.
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