Potential supervisor replied but did not explicitly say if he is ready to supervise I sent an email to a potential supervisor for PhD in Computer Science with a concise introduction, research I am exploring and a brief about how one of his publication is relevant to my research. Put in some good question around it as well. Then I asked if he is willing to take PhD candidates in his lab.

I received a response within half an hour of sending the mail. Though the content is a bit ambiguous. It says, "Thanks. There is just one position available in a particular stream. So please go ahead and apply."

How do I interpret it? Does this mean he is ready to supervise? He didn't put in any response to my question though. How do I reply to him further as I'll have to mention in the application if the supervisor is ready to take me in.
I think the suggestion in the comments is reasonable, but for the sake of providing an answer in the answer section, I will present an alternative.

Yes, list him on the application. What's the worst that can happen? 


If he will supervise you, then there is no issue.
If he does not want to supervise you, he cannot raise a stink without looking like an idiot, since he wrote "please go ahead and apply."


I think the most pertinent take-away from his message is that there is only one opening in the stream. My guess is that he is planning to supervise whoever gets that spot (it sounds like that spot will be pretty competitive, so whoever gets it is likely to be pretty good).