Date: 201203
Local time of day: 1201-1800
Location: MCO.Airport, FL
Flight conditions: VMC
Light: Daylight
Aircraft: B737-700
Operator: Air Carrier
Operating under: Part 121
Flight phase: Taxi
ATC / advisory: Tower MCO
Reporter organization: Air Carrier
Reporter function: Captain
Human factors: Situational Awareness
Second reporter function: First Officer
Anomaly: ATC Issue All Types; Deviation / Discrepancy - Procedural Clearance
Detector: Person Flight Crew
Result: Air Traffic Control Issued New Clearance
Contributing factors: Human Factors
Primary problem: Human Factors

Narrative: [We were] given clearance to taxi to Runway 17R via J4; J; and H1. While southbound on J; we were given the clearance to line up and wait for Runway 17R; which the First Officer read back. While approaching the hold short line for Runway 17R; the First Officer and I accomplished the Before Take off Checklist along with our normal flows. I called out take off N1s; and then looked to my left to make sure the runway final was clear of other aircraft. I said something like 'that aircraft must be going to the other runway or we are all in big trouble;' which in retrospect was not especially clear or accurate given the runway configuration in MCO. I glanced at the First Officer and she queried the Tower with something like 'Tower; Company flight number; are we cleared to line up and wait Runway 17R?' I slowed the aircraft to be able to stop short of the runway hold short line. There was a brief pause and Tower came back with 'Company flight number; hold short of the runway.' The landing aircraft; another Company flight; then queried the Tower to make sure they were cleared to land; and were told; 'Yes; Company XXX; you are cleared to land Runway 17R.' At some time in this exchange; Tower came up and said; 'Yes; I made a mistake;' which helped clear up the situation. Eventually we were cleared for take off and preceded without further incident. The First Officer and I both thought this was very close to a runway incursion. Even though we had clearance to line up and wait; the landing aircraft was at approximately 300' when we would have crossed the hold short line. There would not have been time to clear the runway or take off. In order to avoid a collision; the other aircraft would have had to go around. I can only speculate about why we were given line up and wait instructions; which clearly conflicted with another aircraft that was landing on the same runway. Possibly that aircraft was given a late runway change to preferred Runway 17R for landing or the Controller misjudged the time it would take my aircraft to line up and wait; then take off before the other aircraft arrived. I can tell you that our procedure to look and state that final approach is clear of other aircraft was instrumental in avoiding a conflict in this case. I am concerned about a situation like this in case of reduced visibility; however; switching of runways (if that was a factor) and our required position reports while taxiing would probably have mitigated the risk of this occurring. I was grateful the Controller admitted he made a mistake (we all do); as that cleared up the situation for us. I also think it would help if I could see what the Controller can see from the Control Tower (I have never been in a Tower like the one in MCO); and if the Controller could ride in the cockpit like they used to do. I don't know if they realize I could not see the other aircraft when he cleared us to line up and wait. We were southbound on Taxiway J; only when I turned perpendicular to the runway on H1 could I look up and see the other aircraft.'


Second narrative: [Narative #2 had no additional information.]


Synopsis: Air Carrier departing MCO received a 'line up and wait' clearance from ATC but then noted a landing aircraft on final and questioned the Controller; the Controller revised the clearance to 'hold short' admitting error on his/her part.