First Officer reported a critical ground conflict occurred when they entered the runway for departure at the same time as another departing aircraft due to clearance confusion. The First Officer stopped the aircraft and was instructed by ATC to exit the runway.

Narrative

Our airplane was holding short of Runway XXR at Taxiway 1; per ZZZ Tower's instruction. After a short period of time; the pilot monitoring and I believe we heard the Tower Controller clear our airplane to line up and wait Runway XXR. The pilot monitoring replied to the Tower Controller on the Tower frequency with our tail number and that we would line up and wait Runway XXR. Just after advancing our airplane over the hold short lines; the pilot monitoring and I noticed another airplane on the opposing taxiway in front of us taxiing past its respective hold short lines onto Runway XXR. I immediately took evasive action by depressing the brakes and bringing our airplane to a complete; safe; and abrupt stop. A near collision was not a factor here; our aircraft had only moved a few feet past the hold short lines before stopping. The pilot monitoring immediately asked the Tower Controller to confirm whether the line up and wait clearance was for our tail number. The Tower Controller replied negative. The pilot monitoring asked the Tower Controller for further instructions on how we should proceed provided the current situation and our position. Now clear of the opposing airplane as it taxied into position for takeoff; the controller instructed our crew to taxi straight ahead off Runway XXR; make a three-hundred sixty degree turn; and hold short of Runway XXR. We immediately complied. Reflecting upon this event; the pilot monitoring and I believe we heard that our tail number had been cleared to line up and wait Runway XXR. Additionally; after the pilot monitoring replied to the Tower Controller that our tail number was cleared to line up and wait Runway XXR; the Tower Controller never corrected our read back; had it been erroneous. The Tower Controller may have actually said that the tail number of the opposing airplane was cleared to line up and wait Runway XXR. As both airplanes had taxied past the respective hold short lines; I noticed the other airplane had a similar tail number to ours. While it is understandable that confirmation bias and/or lack of absolute radio clarity may have led the pilot monitoring and I to believe the Tower Controller said our tail number; there are some things that could have changed the outcome of this event. First; our crew should slow down and ensure and actively agree with each other that we heard the full clearance for our tail number. Second; we should be more situationally aware that there was another airplane of the same type on the opposing taxiway and that it may have a similar call sign. As a result of this; I completed a WINGS course about preventing runway incursions to be better educated as a pilot. It is also now more thoroughly engrained in me that if uncertain of any part of an instruction; stop and ask ATC. ATC may not be able to immediately correct an erroneous read back if; as an example; they are prioritizing something else. Further; I recognize that both pilots and controllers make mistakes; and it is our collective duty to be proactive with mitigating and eliminating mistakes. I appreciate all the hard work our ATC controllers do every day to keep everyone safe.