PLT RPTS AUTOPLT DID NOT HOLD ALT AS PROGRAMMED CAUSING DEV FROM ASSIGNED.

Narrative

IN THE VICINITY OF DBQ VOR; WE WERE CLRED TO CLB TO FL250 BY ZAU. THE AUTOPLT WAS ENGAGED IN HDG AND IAS MODES. 2000 FT; 1000 FT AND 300 FT ALT ALERT CALLS WERE MADE BY COPLT (PNF) TO THE CAPT (PF). THESE CALLS WERE ACKNOWLEDGED AND THE PF CALLED LEVELING AT FL250. ALT HOLD ON THE AUTOPLT WAS ENGAGED AT FL250 BY THE PF. CTR CALLED TFC AT 12 O'CLOCK AND 8 MI AT FL260 AND ADVISED US TO MAINTAIN FL250. I SCANNED AND LOCATED THE TFC; A TWIN TURBOPROP; AT APPROX 1 O'CLOCK; 1000 FT ABOVE AND 5 MI. I THEN GLANCED IN AT THE ALTIMETER TO VERIFY THAT WE WERE STILL LEVEL AT FL250 AND SAW THAT WE HAD DRIFTED UP APPROX 150 FT AND THAT THE PF WAS CORRECTING THE SIT BY COMMANDING THE AUTOPLT TO PITCH DOWN (WHICH AUTOMATICALLY KICKED THE ALT HOLD 'OFFLINE'). I ADDITIONALLY NOTED THE IVSI TRENDING DOWN. I THEN CALLED CTR WITH THE TFC IN SIGHT; NO FACTOR; AND THAT WE WERE HEADING BACK DOWN TO FL250. THE TURBOPROP CALLED TO ADVISE THAT THEY WERE CLBING REF THEIR TCASII. CTR THEN CALLED TO QUESTION WHAT ALT WE WERE CLRED TO. I ADVISED THEM FL250. CTR THEN ASKED WHY DID I REPLY HDG BACK TO FL250 AND ADVISED US OF A POSSIBLE PLTDEV. THE CAPT (PF) THEN TOLD CTR THAT THE AUTOPLT HAD DRIFTED UP TO FL251.5 AND WE HAD THEN IMMEDIATELY DSNDED BACK DOWN. THE CTLR REPLIED THAT IT WAS ALL ON TAPE; ADVISED US TO CLB TO A SPECIFIED ALT AND CONTACT THE NEXT CTLR. DURING THIS CONVERSATION THE TURBOPROP ADVISED THAT HE WAS RETURNING TO FL260. THE INCIDENT DESCRIBED LASTED APPROX 5 MINS. CHAIN OF EVENTS. THE PROB AROSE DUE TO: 1) A MALFUNCTION IN THE AUTOPLT'S ALT HOLD FUNCTION. 2) FAILURE OF THE FLC TO QUICKLY NOTICE THAT THE AUTOPLT WAS DRIFTING ABOVE FL250 AND TAKE TIMELY CORRECTIVE ACTION. CONTRIBUTING FACTORS: 1) 'SOFT' FAILURE OF THE ALT HOLD FUNCTION OF THE AUTOPLT (IE; NO WARNING FLAGS). 2) CONFUSING RADIO CALL THAT WE WERE HEADING BACK DOWN TO FL250. HOW IT WAS DISCOVERED: 1) MY RADIO CALL THAT WE WERE RETURNING TO FL250 AFTER DRIFTING UP TO FL251.5. 2) OTHER ACFT'S TCASII. CORRECTIVE ACTIONS: 1) MGMNT; CHIEF PLT AND ALL LINE PLTS HAVE BEEN ADVISED OF PROB WITH THE AUTOPLT. 2) A REVIEW OF PROPER RADIO PROCS AND REPLIES TO ATC CLRNCS WAS MADE BY PNF. HUMAN PERFORMANCE CONSIDERATIONS: LACK OF ATTN IN MONITORING THE AUTOPLT.