Leslie L. deVeau, a former teacher and social worker charged with first-degree murder in the shotgun slaying of her 10-year-old daughter last March, was found not guilty by reason of insanity yesterday after government prosecutors declined to contest a defense claim that she suffers from paranoid schizophrenia.

Psychiatrists called as expert witnesses in a hearing before D.C. Superior Court Chief Judge H. Carl Moultrie I testified that deVeau, 39, felt she was "a bad person" who brought harm to those she loved. The psychiatrists said she shot her daughter and attempted to kill herself because she thought both of them would be better off dead.

DeVeau, whom Moultrie ordered committed to St. Elizabeths Hospital for a minimum of 50 days, suffered from delusions that the world was conspiring against her and believed in a "fantasy island" where she and her daughter could go to escape their problems, psychiatrist Thomas C. Goldman testified.

Goldman, testifying for the defense, said deVeau had attempted suicide several times, once with her husband Anthony's 12-gauge shotgun, and believed when he later replaced the gun under the couple's bed and stored ammunition in their bedroom that he wanted her to kill herself.

Goldman said that deVeau wanted to have another child, but had been unable to after several miscarriages. As a result, Goldman said she felt she could not give her husband what he wanted and may have been spurred to kill her daughter because her best friend was giving birth on March 18, the day of the shootings.

DeVeau "hated herself and felt hopeless," Goldman testified, adding that she thought that "nothing but badness awaited her and her daughter in the real world." She shot Erin, a fourth-grader at Janney Elementary School, in the belief that "she was protecting her from something worse and that if she didn't, there wouldn't be anyone around to protect her," the psychiatrist said.

DeVeau was charged with first-degree murder after her daughter's body, shot once in the back with the 12-gauge shotgun at close range, was discovered in an upstairs bedroom at the family's two-story brick home at 5112 45th St. NW. DeVeau was found in her bedroom with a self-inflicted shotgun wound to the shoulder. Her left arm later had to be amputated.

Yesterday, the defendant, along with her public defender, Mark Carlin, and Assistant U.S. Attorney William D. Nussbaum, stipulated in court that she shot her daughter Erin as she lay in bed around 7:30 a.m. But the attorneys stipulated that deVeau "lacked criminal responsibility for her act."

Nussbaum, in a move prosecutors said is not unusual in such cases, told Moultrie the government would not contest deVeau's insanity defense because government psychiatrists agreed with the finding.

Under D.C. law, defendants who use the insanity defense must prove by uncontroverted evidence that they suffered a mental defect at the time of the offense and were unable to conform their conduct to the requirements of the law.

DeVeau, who is being confined in the maximum-security John Howard Pavilion at St. Elizabeths, will be eligible for a court hearing in 50 days to determine whether she continues to suffer from a mental illness that would require her to be held there. If she is not released then, she would be eligible to petition the court for release every six months thereafter.

Several of deVeau's friends and relatives, including her sister, Jean Reynolds, attended yesterday's hearing. DeVeau, wearing a blue skirt with a matching blue blazer draped over her shoulders, exchanged smiles with her friends and spoke animatedly with her defense attorneys.

But as she sat at the defense table and listened to the details of the slaying and heard her mental condition unfold, her mood changed visibly and she wept, clutching a tissue.

According to psychiatrists, deVeau spent a month at the Psychiatric Institute in the fall of 1978 and was taking drugs to treat her mental condition until the spring of 1981.

But they said deVeau's condition worsened after she quit taking her medication. She was "unable to distinguish fantasy from reality" and suffered delusions that people were following her.

She also was "preoccupied about getting out of her marriage," Goldman said, and distressed that "it wasn't working." But her husband "would not agree to a separation." Anthony deVeau was not present in court yesterday and later declined comment on the case.

Two months before the slaying, Leslie deVeau attempted to take an overdose of pills, according to government psychiatrist Neil Blumberg. By March, the month of the slaying, Goldman said deVeau wrote in her diary of "a fantasy island, a place where she and her daughter could go and be safe from all the ills she saw around her in Washington.

"Perhaps she thought they would be going there after death," Goldman concluded.