AFAIK the only way to achieve a code block in readme.txt is to use the <pre> tag.

It would be nice to add support for a lang attribute so that syntax highlighting can be added when converting to markdown.

TXT

<pre lang="php">
function foo() {
    $bar = 'baz';
}
</pre>

Markdown

function foo() {
    $bar = 'baz';
}