All Mode C and Mode S Pressure Altitude reports from transponders are referenced to 1013.25mB regardless of QNH in the region or zone the aircraft is flying. This ensures that aircraft remain vertically separated regardless of pressure variations along routes. As such, above transition level, everyone uses Flight Levels.
Below transistion level, the transponder still uses 1013.25mB, no matter what the pilot has the QNH set to. Many (majority of?) display systems used by ATC will convert the 1013.25 referenced Flight Levels into an Altitude based upon a QNH setting, displaying the altitude to the controller which should be close to what the aircraft is flying to.
This change to ICAO, as mentioned below, is to accommodate other future sources of altitude / Flight Level information that may be "radar derived" but are not from pressure altitude source.
If any of the above isn't quite correct, I'm sure someone will correct me, after all I am only an engineer
RS