RATIONALE: Drugs used in chemotherapy use different ways to stop cancer cells from dividing so they stop growing or die. Combining chemotherapy with peripheral stem cell transplantation may allow the doctor to give higher doses of chemotherapy drugs and kill more cancer cells.

PURPOSE: Randomized phase III trial to compare the effectiveness of idarubicin plus peripheral stem cell transplantation using the patient's own or donated stem cells in treating patients with leukemia or myelodysplastic syndrome.

OBJECTIVES: I. Assess the value of idarubicin added to the standard conditioning regimen of allogeneic and autologous stem cell transplantation in patients with leukemia or myelodysplastic syndrome at high risk of relapse. II. Determine time to recovery of polymorphonuclear neutrophil leukocyte (PMN) and platelet counts in these patients. III. Evaluate the rate and type of grade 3-4 toxicity, particularly mucositis, and the number of days with fever in these patients. IV. Determine the incidence of acute and chronic graft versus host disease (GVHD) in these patients.

OUTLINE: This is a randomized, multicenter study. Patients are stratified according to disease (acute myelogenous leukemia (AML) vs acute lymphocytic leukemia (ALL) or lymphoblastic leukemia (LL) vs myelodysplastic syndrome (MDS) or secondary AML vs chronic myelogenous leukemia (CML) vs non-Hodgkin's lymphoma vs multiple myeloma), stage of disease (if not CML, 1st complete response (CR) vs 2nd CR vs no 1st/2nd CR; if CML, 1st CR vs other phases), conditioning regimen (cyclophosphamide (CTX) and total body irradiation (TBI) vs busulfan (BU) and CTX vs other), source of donor (allogeneic vs autologous), T-cell depletion or autologous transplantation (no vs yes), and source of stem cells (bone marrow vs peripheral blood stem cell). Patients are randomized to receive a standard regimen or an intensified regimen. Standard pretransplant treatment: CTX on days -6 and -5 and TBI on days -4 through -2, or BU on days -8 through -5 and CTX on days -4 and -3, or BU on days -8 through -5 and melphalan IV on day -4. Intensified pretransplant regimens: I. Continuous infusion of idarubicin (IDA) over 48 hours on days -12 and -11, followed 5 days later with CTX on days -6 and -5 and TBI on days -4 to -2 II. IDA followed 5 days later with BU on days -8 through -5, and then CTX on days -4 and -3 III. IDA followed by BU on days -8 through -5 and melphalan IV on day -4. Stem cells are infused on day 0. Patients are followed every 3 months during the first 3 years, then every 6 months thereafter.

PROJECTED ACCRUAL: A total of 207 patients will be accrued for this study within 3 years.

DISEASE CHARACTERISTICS: Acute myelogenous leukemia (AML), acute lymphocytic leukemia (ALL), lymphocytic leukemia (LL) or myelodysplastic syndromes (MDS) with at least one of the following high risk criteria: T-cell depleted stem cells or autologous stem cells Second complete response (CR) Previous CNS involvement No CR First CR achieved more than 5 weeks after start of remission-induction therapy Poor prognostic cytogenetic features: t(9;22), t(8;14), t(11;14), 11q23 anomalies, -5/5q-anomalies, -7/7q-anomalies, +8, complex cytogenetics Postcytotoxic/secondary AML Chronic myelogenous leukemia (CML) with at least one of the following high risk criteria: T-cell depleted stem cells Not in first chronic phase Non-Hodgkin's lymphoma or multiple myeloma Autologous stem cells

PATIENT CHARACTERISTICS: Age: 16 to 60 Performance status: WHO 0-2 Hematopoietic: Not specified Hepatic: Bilirubin no greater than 1.5 times upper limit of normal (ULN) Renal: Creatinine no greater than 1.5 times ULN Cardiovascular: No severe heart failure requiring diuretics No ejection fraction of less than 50% Neurologic: No severe concurrent neurological or psychiatric disease Other: HIV negative No allogeneic stem cells from donors other than HLA identical sibling(s)

PRIOR CONCURRENT THERAPY: See Disease Characteristics