RATIONALE: Drugs used in chemotherapy use different ways to stop cancer cells from dividing so they stop growing or die.

PURPOSE: Phase III trial to compare the effectiveness of combination chemotherapy in treating children who have relapsed acute lymphoblastic leukemia.

OBJECTIVES: I. Improve the outcome in children with first isolated central nervous system (CNS), testicular, or ocular relapse of acute lymphoblastic lymphoma (ALL), and increase the knowledge of the characteristics of extramedullary and subsequent relapses of ALL. II. Quantitate, by current molecular biologic techniques, occult systemic leukemia in cases of conventional isolated extramedullary relapse, and examine the relationship between this assessment and subsequent clinical outcome, particularly overt marrow relapse. III. Quantitate occult systemic leukemia in subsets of extramedullary relapse that include site (CNS, testis, or eye), time of relapse (early or late), initial risk group, immunophenotype, DNA index and karyotype, gender (for CNS and eye), and ethnicity, and assess the response to therapy in patients entered on companion protocol CCG-B958. IV. Compare the relative sensitivities of two quantitative in vitro assays for occult systemic leukemia (fluorescence-activated cell sorter/leukemic progenitor cell clonogenic assay vs. polymerase chain reaction-based clonospecific assay), correlate the assays with clinical outcome, and assess other biologic studies of leukemic cells (e.g., neurotropic potential in the SCID mouse xenograft model and methotrexate sensitivity). V. Determine the event-free survival (EFS) and pattern of failure in children with first isolated CNS, testicular, or ocular relapse after treatment that includes intensive systemic chemotherapy. VI. Correlate EFS in patients with CNS and ocular relapse with sex, and in patients with relapse at all three sites with ethnicity. VII. Evaluate the impact of combined chemotherapy and radiotherapy on health status in survivors at two and four years after extramedullary relapse and study entry.

OUTLINE: All patients receive induction chemotherapy over 5 weeks with: etoposide, ifosfamide/mesna, dexamethasone, vincristine, and pegaspargase (if pegaspargase is not available, E. coli asparaginase may be substituted throughout study); then dexamethasone, vincristine, pegaspargase (or E. coli asparaginase), and high-dose methotrexate with leucovorin rescue; and triple intrathecal chemotherapy (TIT). Following induction chemotherapy, all patients receive two 6-week courses of intensification therapy with intermittent TIT; each course consists of dexamethasone, vincristine, high-dose methotrexate/leucovorin, thioguanine, cytarabine, etoposide, and pegaspargase (or E. coli asparaginase) followed by dexamethasone, vincristine, high-dose methotrexate/leucovorin, thioguanine, ifosfamide/mesna, and idarubicin. Patients receive 2 additional courses of intensification chemotherapy followed by four 12-week courses of maintenance chemotherapy with vincristine and methotrexate every 2 weeks and daily oral thioguanine. Total duration of therapy is 78 weeks. Patients with isolated ocular relapse receive local radiotherapy prior to initiation of induction chemotherapy; those who also have CNS leukemia begin TIT with the radiotherapy. Patients with CNS relapse receive craniospinal irradiation during the first month of maintenance therapy, with the dose and fields based on whether they will receive TBI and whether they have had CNS irradiation previously. Patients with testicular relapse receive bilateral testicular irradiation during the first 3 weeks of intensification therapy. Patients are followed every 3 months for 3 years, every 6 months for 3 years, and yearly thereafter, or upon relapse, second malignancy, loss to follow up, or death. All patients undergo quality-of-life assessment at entry and 2 and 4 years after entry.

PROJECTED ACCRUAL: Approximately 120 patients will be accrued for this study.

DISEASE CHARACTERISTICS: Acute lymphoblastic leukemia (ALL) with isolated extramedullary relapse Relapse occurred during or following front-line therapy for ALL Initial diagnosis of more than 25% blasts of L1 or L2 morphology No leukemic marrow (M1) by conventional assessment Patients with B precursor ALL must also be enrolled on study CCG-B958 Relapse occurred in the CNS, testis, or eye Ocular relapse confirmed by an ophthalmologist and by cytology or iris biopsy Combined CNS and ocular relapse eligible Down Syndrome patients not eligible No prior bone marrow transplantation in first remission No prior toxicity from any study drugs Patient age: Under 21

PATIENT CHARACTERISTICS: See General Eligibility Criteria