However, Stephen Bailey will stay in prison for another six months, because of a shortage of beds at Victoria's high-security psychiatric hospital.

The body of his mother, Penelope Bailey, was found in a creek bed in suburban Donvale in 2015, three days after her son was arrested when he was seen running through traffic in his underwear.

The Supreme Court this week heard Bailey, 36, was experiencing a "florid state of psychosis" when he killed his mother on October 5 in her Mont Albert North home.

Details of the injuries Mrs Bailey suffered have been suppressed.

Bailey was charged with murder, but despite admitting he killed his 59-year-old mother, pleaded not guilty by way of mental impairment.

The court this week heard Bailey, a former VFL player, was schizophrenic and had delusions he was Jesus, a god, a genius and the head of a new world order at the time of the killing.

He was arrested in Kensington, where he was found running through traffic in his underwear and referring to himself as Aristotle.

Justice Stephen Kaye on Thursday ruled he was satisfied that Bailey did not know his conduct was wrong at the time and was not guilty of murder.

The judge heard the case alone without a jury.

Prosecutors did not raise any opposition to the defence claim Mr Bailey was mentally unwell.

However, the court heard Mr Bailey's family raised doubts about the nature of his symptoms.

Two psychiatrists told the court it was very difficult to feign psychosis, and said they believed he was mentally unwell.

Despite that evaluation, Bailey was returned to Port Phillip Prison on Thursday because of a shortage of beds at the Thomas Embling Hospital.

There are only 12 beds at the hospital for prisoners and there is a six-month wait before a bed becomes available, psychiatrist Mark Ryan told the court earlier in the week.

Justice Kaye said on Thursday it was suitable that Bailey be supervised at the hospital. Bailey will be medically assessed and is due to return to court in June in the chance a bed has become available for him.

In February it was announced Thomas Embling would get an extra 10 beds for patients who come from prison and need psychiatric care.

Bailey believed his family weren't who they said they were, Dr Ryan said on Tuesday, and thought they were trying to persecute them.

But his family raised doubts over his mental-impairment defence having been told by police that he appeared to be "foxing", the court heard.