FLC COPIED WRONG ALTIMETER SETTING CAUSING THE ACFT TO LEVEL OFF 400 FT TOO LOW.

Narrative

FO WAS FLYING THE ACFT; I (CAPT) WAS WORKING THE RADIOS; TALKING TO COMPANY; AND RECORDING ATIS FOR ARR ARPT (IAD). DURING DSCNT OUT OF FL180; ON THE JASEN 1 ARR TO DULLES (IAD STAR); FO SET 29.94 INCHES ON ALTIMETER AND CONTINUED DSCNT TO ASSIGNED ALT OF 10000 FT MSL (FO HAD RECEIVED THIS ALTIMETER SETTING FROM ZDC PRIOR TO LEAVING FL180). I AGAIN REJOINED FO ON ZDC FREQ AND FO BRIEFED INST APCH FOR IAD. I READ THE DSCNT CHKLIST AND ALSO SET IN ALTIMETER SETTING 29.94 INCHES. THE ABOVE WAS ALL COMPLETED PRIOR TO FO REACHING 10000 FT MSL. UPON REACHING 10000 FT MSL ZDC CALLED US AND TOLD US TO CHANGE OUR XPONDER TO 2954. I REPEATED BACK THE INSTRUCTIONS BUT STATED THERE IS NO '9' POSSIBLE FOR XPONDER; ASKED CTR TO 'SAY AGAIN.' CTR STATED WE WERE SHOWING 400 FT LOW ON OUR ALTIMETER. THEN CTR RESTATED ALTIMETER SETTING TO BE 29.54 INCHES. I XCHKED WITH (IAD) ATIS ALTIMETER RPTED AT 29.53 INCHES. WE BOTH RESET OUR ALTIMETERS AND FO CORRECTED ALT BACK TO 10000 FT MSL. ZDC SAID NOTHING MORE AND THERE WAS NO APPARENT CONFLICT OR VIOLATIONS FILED.