It was disappointing to read on the Sunday, Nov. 11, 2001, bulletin cover
  from CPH, "The Kingdom of God is within you."
  Some LCMS pastors reject the fact that the congregation is a kingdom of
  Christ. They claim identifying the church as the kingdom of Christ means
  Christ has many kingdoms instead of one church.
  The translation from CPH becomes their proof that the local congregation is
  not the Kingdom of Christ. Some even believe only the presence of an ordained
  minister makes the congregation the Kingdom of Christ.
  However, if the local congregation is not the Kingdom of Christ it also is
  not the church. Christ says in Matt. 18:20, "Where to or three are
  gathered together in my name there am I in the midst of them." He doesn't
  say "in them."
  Every local congregation is the Kingdom of Christ, just as every Communion
  wafer is the Body of Christ, not a piece of the Kingdom or a piece of the Body
  of Christ.
  The NIV is incorrect when it translates Luke 17:21, "The Kingdom of
  God is within you." Lenski and Kretzmann are also incorrect when they
  translate, "For lo, the kingdom of God is inside you (or within
  you.)!" The King James Version started this bad translation and many
  follow, but not NASB, Beck 1976, or RSV or commentaries by Arndt, Just,
  Alford, or Tiede.
  Noted Commentators Write:
  Arndt is correct when he translates, "The Kingdom of God is in your
  midst."
  Doctor Arndt explains, "The Kingdom was identified with the church,
  and the passage was regarded an important test to prove that the church is
  invisible." He points out that there is no other verse using
  "entos" that places anything inside anyone in the New Testament.
  Arndt is brilliant when he says, "It must not be overlooked that Jesus
  is addressing Pharisees; He would not say that the rule of God was in their
  hearts."
  Doctor Just is also correct when he translates, "the Kingdom of God is
  among you." Just writes, "'Within you' would introduce a foreign
  theology that is not reflected in Jesus' theology in any of the
  gospels."(page 662) He points out that the Kingdom comes from Christ
  through Word and Sacrament.
  Arndt's interpretation preserves the "people as the church."
  Christ tells us Matthew 18:20 "For where two or three are gathered
  together in my name, there am I in the midst of them."
  Alford writes, "The misunderstanding which rendered these words,
  'within you,' meaning this in a spiritual sense, 'in your hearts,' should have
  been prevented by reflecting that they are addressed to the Pharisees, in
  whose hearts it certainly was not."
  Tiede states, "The kingdom of God is in the midst of you. This is
  consistent with Luke 10:9,11 where the kingdom 'has drawn near to you' in the
  preaching of the apostles and with Luke 11:20 where Jesus 'exorcising by the
  'finger of God' is the sign that the Kingdom of God 'has come upon you."
  No one individual or pastor is a church. No one has the kingdom of God in
  them. When we enter a local congregation we enter the Kingdom of God. We must
  have two or three gathered together in Christ's name around Word and Sacrament
  who then have the authority of Christ's Kingdom to be a congregation, a
  kingdom of God, the church, and the authority to issue a divine call.
  Hence, the voters are the supreme authority in the church because there
  can' t be an LCMS congregation unless the voters confess the truth about the
  means of grace, the presence of Christ and His kingdom.
  The Confessions Teach:
  
    - Luther's Large Catechism, Second Petition: Par. 54 "so that through
      the Word and the power of the Holy Ghost Thy kingdom may prevail AMONG
      US,"
 
    - Apology: Articles VII and VIII: Of the Church. par. 16] "Besides,
      THE CHURCH is the kingdom of Christ,"
 
    - [same par]Therefore, the Church, which is truly the kingdom of Christ,
      is properly the congregation of saints.
 
    - Article IX: Of Baptism. [53] " . . . It does not, however, pertain
      to those who are outside of Christ's Church, where there is neither Word
      nor Sacraments, because the kingdom of Christ exists only with the Word
      and Sacraments."
 
    - Power and Primacy of the Pope [16] " . . . For it is manifest that
      the kingdom of Christ is scattered throughout the whole world; and to-day
      there are MANY CHURCHES in the East which do not seek ordination or
      confirmation from the Roman bishop [which have ministers ordained neither
      by the Pope nor his bishops]."
 
  
  The local congregation must be the kingdom of Christ because only the local
  congregation uses the sacraments. The presence of Christ on earth is the
  kingdom of God on earth identified by the means of grace, the marks of the
  church.
  The Bible Teaches:
  Luke 16:16 The law and the prophets were until John: since that time the
  kingdom of God is preached, and every man presseth into it.
  Colossians 1:13 Who hath delivered us from the power of darkness, and hath
  translated us into the kingdom of his dear Son.
  We see here that the kingdom of God is not in us but that God has placed us
  or translated us into His kingdom. The change of status took place at our
  Baptism.
  Luther:
  In his early years Luther was adamant that the Kingdom of God is in us. He
  used Luke 21:17 to prove that we didn't need the Pope because we were
  individually the kingdom or the church of God.
  Luther calls the heart, "God's Sanctuary" in (LW10: 419).
  Again, "It is as if He were saying: 'Outside of you is exile. Outside
  of you is everything which is seen and touched, but within you is everything
  which is believed only by faith." (LW25: 3 83)
  And again, "They keep running to Rome, Jerusalem, St. James's, and a
  thousand other places, as if the kingdom of God were not with them instead
  (Luke 17:21). (LW 27:337)
  And finally, "since the kingdom of heaven (as Christ says) is within
  us." LW 42:147 (1519)
  Then in 1521, Luther's understanding of Luke 21:17 changed. He writes,
  "Th e kingdom of God is in the midst of you. LW 39:218 (1521)
  Luther's German Bible reads, in Luke 21:17 "mitten unter euch" or
  "centered among us." He translates Matt. 18:20 "mitten unter
  ihnen" or "centered among us" when Christ says "Where two
  or three are gathered together there am I in the midst of them."