RATIONALE: Drugs used in chemotherapy use different ways to stop tumor cells from dividing so they stop growing or die. Radiation therapy uses high-energy x-rays to damage tumor cells. Combining more than one chemotherapy drug with radiation therapy may kill more tumor cells.

PURPOSE: Phase II trial to study the effectiveness of radiation therapy and chemotherapy consisting of carboplatin, etoposide and paclitaxel in treating patients with newly diagnosed stage III non-small cell lung cancer.

OBJECTIVES: I. Assess the survival and failure-free survival in poor risk patients with stage IIIA or IIIB non-small cell lung carcinoma treated with concurrent radiation, carboplatin, and etoposide followed by consolidation with paclitaxel. II. Evaluate the response and toxicities associated with this regimen in this group of poor risk patients.

OUTLINE: This is nonrandomized study. Chemotherapy on cycle 1 starts on day 1 with concurrent initiation of radiotherapy. Chemotherapy is given prior to radiotherapy on those days when both treatments are given. Cycle 2 begins on day 29. Carboplatin is administered by 15 minute IV infusions on days 1, 3, 29, and 31. Etoposide (VP-16) is administered after carboplatin by 30 minute IV infusions on days 1-4, and 29-32. Radiation therapy begins within 24 hours of day 1, cycle 1 of chemotherapy. The primary tumor, the adjacent mediastinum, and other targeted lymph nodes are administered radiotherapy daily 5 days a week for 6.5 weeks. After the 2 cycles of chemotherapy and chest radiotherapy, patients who have stable disease, partial response, or complete response receive 3 cycles of paclitaxel. Paclitaxel is administered by 3 hour IV infusions starting 4 weeks after completion of chemotherapy and radiotherapy and repeated every 3-4 weeks (approximately days 71, 92, and 103) for a total of 3 cycles. Patients are followed every month for the first year, every 3 months for the second year, every 6 months for the third year, and then annually thereafter while on treatment. After treatment, patients are followed every 6 months for 2 years and then annually thereafter.

PROJECTED ACCRUAL: There will be 80 patients accrued in this study over 16 months.

DISEASE CHARACTERISTICS: Histologically confirmed newly diagnosed single primary bronchogenic non-small cell lung cancer (NSCLC) Stage IIIA (T1-2 N2 M0; T3 N0-2 M0) or IIIB (T4 or N3 M0, excluding malignant pleural effusion) Following NSCLC cellular types are eligible: adenocarcinoma large cell carcinoma squamous cell carcinoma unspecified Histology or cytology from involved mediastinal or supraclavicular nodes are sufficient for diagnosis if a separate primary lesion of the lung parenchyma is clearly evident on radiographs Radiographic evidence of mediastinal lymph nodes of at least 1.5 cm in the largest diameter is sufficient to stage N2 or N3 If the largest mediastinal nodes are less than 1.5 cm in diameter and this is the basis for stage III disease, then at least one of the nodes has to be proven positive cytologically or histologically No bronchioloalveolar carcinoma or stage IIIB tumor involving the superior sulcus Patients must meet at least one of the following conditions: - FEV1 less than 2 liters and predicted FEV1 of the contralateral lung no greater than 800 mL based on the quantitative split function testing - Creatinine clearance less than 50 mL/min - Significant clinical hearing loss and unwilling to accept the potential for worsening due to cisplatin - Controlled congestive heart failure that, in the opinion of the investigator, may become decompensated due to excessive hydration prior to cisplatin administration - SWOG performance status 2 and either albumin less than 0.85 times upper limit of normal or weight loss of greater than 10% due to tumor Measurable or evaluable disease Patients with pleural effusion are eligible only if: - pleural fluid must be a transudate with negative cytology if present before mediastinoscopy or exploratory thoracotomy - pleural fluid can be either transudate or exudate with negative cytology if present only after exploratory or staging thoracotomy but not before - in any case, pleural effusion is present only on CT scan but not on decubitus chest x-ray, and it is deemed too small to tap under either CT or ultrasound guidance

PATIENT CHARACTERISTICS: Age: 18 and over Performance status: SWOG 0-2 Life expectancy: Not specified Hematopoietic: WBC at least 3,500/mm3 Absolute neutrophil count at least 1,200/mm3 Platelet count at least 100,000/mm3 Hepatic: Bilirubin no greater than 1.5 times upper limit of normal SGOT no greater than 1.5 times upper limit of normal Renal: Creatinine clearance at least 20 mL/min Cardiovascular: No unstable congestive heart failure No active angina No unstable cardiac arrhythmias Pulmonary: FEV1 at least 1.0 liter Also See Disease Characteristics Other: No uncontrolled peptic ulcer disease No active infection No prior malignancy except adequately treated basal cell or squamous cell skin cancer, in situ cervical cancer, or other cancer for which the patient has been disease free for 5 years Not pregnant or nursing Adequate contraception required of all fertile patients

PRIOR CONCURRENT THERAPY: Biologic therapy: Not specified Chemotherapy: No prior chemotherapy Endocrine therapy: Not specified Radiotherapy: No prior radiation for lung cancer Surgery: No prior surgery for lung cancer