WINNIPEG, Manitoba (Reuters) - A man sleeping on a Greyhound bus as it rolled across the Canadian Prairies was killed and decapitated by his seatmate as horrified passengers fled to safety in the night, witnesses and police said on Thursday.

"All of a sudden, we all heard this scream, this blo*o*dcurdling scream," said Garnet Caton, who was sitting just in front of the victim on the bus. Caton said that when the attack was over, the knife-wielding killer displayed his victim's severed head to the onlookers.

A 40-year-old man was taken into custody at the scene on Wednesday evening on a desolate stretch of the TransCanada Highway about 20 kilometres (12 miles) from Portage la Prairie, Manitoba, but has not been charged, according to the Royal Canadian Mounted Police.

Police declined to speculate on what prompted the attack, and witnesses said the victim and killer, who apparently did not know each other, had enjoyed a casual cigarette break with other passengers only minutes before the attack.

Witnesses described a scene of *lo**y mayhem that erupted without warning on the bus, which was travelling east to Winnipeg, Manitoba, on a routine scheduled run.

"The attacker was standing up right over top of the guy with a large hunting knife -- a survival, Rambo knife -- holding the guy and continually stabbing him, stabbing him, stabbing him in the chest area," Caton told CBC Television.

The attack continued as other passengers fled the bus and waited for police, Caton said. He said he, the driver and another passenger desperately tried to hold the bus door closed to prevent the attacker from leaving.

"He calmly walks up to the front (of the bus) with the head in his hand and the knife and just calmly stares at us and drops the head right in front of us," Caton said.

"There was no rage in him ... It was just like he was a robot or something."

Police praised the calmness and cooperation of the passengers, who were taken to a hotel in Brandon, Manitoba, and were being given crisis counselling and other assistance by authorities and Greyhound.

"Believe me, if we could do our jobs without having you relive this terrible experience we would," RCMP staff Sergeant Steve Colwell said in a statement to the passengers that was read to reporters in Winnipeg.

Passengers said they were having difficulty coping.

"I tried to get to lay down at 4 o'clock this morning but was up 10 minutes later because every time I closed my eyes I'd see this man in the window with some guy's head I had just smoked a cigarette with," Cody Omstead told CTV News.

Greyhound said in a statement that it was cooperating with police to determine what happened. It said that intercity bus travel remained the safest mode of transportation in the country.

(Reporting by Roberta Rampton, Allan Dowd. Writing Allan Dowd. Editing by Peter Galloway)