A relatively small number of signals are responsible for the variety and pattern of cell types generated in developing embryos. In part this is achieved by exploiting differences in the concentration or duration of signaling to increase cellular diversity. In addition, however, changes in cellular competence-temporal shifts in the response of cells to a signal-contribute to the array of cell types generated. Here we investigate how these two mechanisms are combined in the vertebrate neural tube to increase the range of cell types and deliver spatial control over their location. We provide evidence that FGF signaling emanating from the posterior of the embryo controls a change in competence of neural progenitors to Shh and BMP, the two morphogens that are responsible for patterning the ventral and dorsal regions of the neural tube, respectively. Newly generated neural progenitors are exposed to FGF signaling, and this maintains the expression of the Nk1-class transcription factor Nkx1.2. Ventrally, this acts in combination with the Shh-induced transcription factor FoxA2 to specify floor plate cells and dorsally in combination with BMP signaling to induce neural crest cells. As development progresses, the intersection of FGF with BMP and Shh signals is interrupted by axis elongation, resulting in the loss of Nkx1.2 expression and allowing the induction of ventral and dorsal interneuron progenitors by Shh and BMP signaling to supervene. Hence a similar mechanism increases cell type diversity at both dorsal and ventral poles of the neural tube. Together these data reveal that tissue morphogenesis produces changes in the coincidence of signals acting along orthogonal axes of the neural tube and this is used to define spatial and temporal transitions in the competence of cells to interpret morphogen signaling.