Man accused of murdering two backpackers in a north Queensland hostel will not face trial after he was ruled mentally unsound during the stabbing attack.

Smail Ayad was charged with 16 offences, including the murder of 21-year-old Mia Ayliffe-Chung and 30-year-old Tom Jackson in Townsville in August 2016.

Mental health professionals say Smail Ayad was suffering paranoid schizophrenia and remains in a mental health facility on South East Queensland.