A Texas inmate on death row was spared from execution on Wednesday, hours before he was scheduled to die by lethal injection.

Scott Panetti's attorneys appealed his sentence on the grounds that he is too mentally ill to be executed.

Panetti was convicted and sentenced in 1995 for the murders of Amanda and Joe Alvarado, his estranged wife's parents. Panetti's wife and daughter had moved in with the Alvarados, and he shot the couple at close range at their home in Fredericksburg in 1992.

The 56-year-old was diagnosed with schizophrenia in 1978, and had been hospitalised over a dozen times in the decade before the shootings. However, Panetti was found competent enough to stand trial, and acted as his own attorney.

During the proceedings, the Wisconsin native took on a personality called "Sarge," wore a purple cowboy costume, and attempted to subpoena more than 200 people, including the Pope and Jesus Christ. Panetti also claimed that the devil was working through the Texas penal system to put him to death so that he could not spread God's word.

Despite his mental health history and bizarre behaviour, Panetti was never found incompetent or insane.

Attorneys Gregory Wiercioch and Kathryn Kase visited Panetti in the weeks before the scheduled execution, and said his condition had worsened.

"Mr Panetti's execution would offend contemporary standards of decency," they said in their appeal to the Supreme Court.

The 5th US Circuit Court of Appeals cancelled the execution to "fully consider the late arriving and complex legal questions at issue in this matter," and will hear arguments in a future hearing.

Assistant Texas Attorney General Ellen Stewart-Klein questioned the severity of Panetti's illness.

"Panetti's assertion of severe mental illness are in doubt when compared to the multiple past findings on his sanity, competency to stand trial and competency to be executed, as well as evidence submitted by the state," she said.

"Panetti's case is an inappropriate one to create a new rule of law."