The displayed gray level of a plasma display panel (PDP) is often different from the intended target gray level because the displayed level is affected by line load (the number of on-cells in a scan line). Previous attempts to reduce this difference (i.e. error) have been applicable to PDPs with no constraint imposed on the on-off decision for each sub-field. In order to improve the image quality (e.g. dynamic false contour (DFC) reduction), recently-developed PDPs impose constraints on sub-field coding and reduce the number of gray levels. This paper proposes a new sub-field coding algorithm that compensates for level error caused by the load when constraints are imposed on sub-field coding. As the number of gray levels is reduced, halftoning is employed in order to represent intermediate gray levels. In the proposed algorithm, the magnitude of the level error caused by the load effect is predicted and then two levels that are used for the halftoning are modified to compensate for the error. The modified levels are the nearest levels to the input level among the levels that satisfy the constraint of the sub-field coding. In order to reduce errors with moderate computational complexity, error prediction and level update are repeated by twice. A significant error reduction is achieved and shown by simulation and experimentation using a 42-inch PDP, including a 93.5% reduction in the mean absolute error (MAE) in simulations and a 67.2% reduction in MAE in experiments on a PDP.