RATIONALE: Peripheral stem cell transplantation may be able to replace immune cells that were destroyed by chemotherapy or radiation therapy used to kill tumor cells. It is not yet known if total-body irradiation plus peripheral stem cell transplantation is more effective with busulfan or with cyclophosphamide for myelodysplastic syndrome or acute myeloid leukemia.

PURPOSE: Randomized phase III trial to compare the effectiveness of busulfan with that of cyclophosphamide in patients undergoing total-body irradiation plus peripheral stem cell transplantation for advanced myelodysplastic syndrome or related acute myeloid leukemia.

OBJECTIVES: I. Compare event free survival after total body irradiation (TBI) plus busulfan versus TBI plus cyclophosphamide followed by allogeneic peripheral blood stem cell transplantation in patients with advanced myelodysplastic syndrome (MDS) or MDS related acute myeloid leukemia. II. Determine the distribution of pharmacokinetic parameters for busulfan in those patients randomized to the busulfan treatment arm. III. Investigate the prognostic significance for event free survival of prior history of red cell transfusions, cytogenetic pattern, and of functional drug resistance at diagnosis in these patients. IV. Estimate the frequencies of cytogenetic and genetic changes during disease progression in these patients.

OUTLINE: This a randomized, multicenter study. Patients are stratified according to age (40 and under vs 41-55) and diagnosis and International Prognostic Scoring System (IPSS) risk group (myelodysplastic syndrome (MDS)/IPSS - intermediate 1 vs MDS/IPSS - intermediate 2 vs MDS/IPSS high risk vs MDS related acute myeloid leukemia). Patients are randomized to one of two treatment arms. Arm I: Patients receive busulfan IV over 2 hours every 6 hours on days -7 to -4 for a total of 16 doses. Arm II: Patients receive cyclophosphamide IV over 2 hours on days -5 and -4. Patients receive total body irradiation (TBI) twice a day on days -3 to -1; peripheral blood stem cell transplantation from genotypically HLA identical sibling on day 0; cyclosporine IV every 12 hours on days -1 to 60, and then tapering in the absence of graft versus host disease; and methotrexate IV on days 1, 3, 6, and 11. Patients are followed every 6 months for 5 years.

PROJECTED ACCRUAL: A total of 240 patients (120 per treatment arm) will be accrued for this study over 5 years.

DISEASE CHARACTERISTICS: Cytologically confirmed myelodysplastic syndrome (MDS) Increased blasts (i.e., greater than 1 to 30% peripheral blood blasts and/or 5 to 30% bone marrow blasts) AND International Prognostic Score intermediate 1, intermediate 2, or high risk Refractory anemia with excess blasts OR Refractory anemia with excess blasts in transformation (no presence of auer rods as sole criteria) OR Chronic myelomonocytic leukemia Greater than 1% blasts in the peripheral blood and/or at least 5% blasts in the bone marrow OR MDS related acute myeloid leukemia Arising after documented MDS of at least 60 days Absolute peripheral blast count no greater than 5,000/mm3 Must have genotypically HLA identical sibling donor Must also be enrolled on SWOG-S9910 and SWOG-9007

PATIENT CHARACTERISTICS: Age: 16 to 55 Performance status: Zubrod 0-2 Life expectancy: Not specified Hematopoietic: See Disease Characteristics Hepatic: Not specified Renal: Not specified Other: No prior malignancy within past 5 years except: Adequately treated basal cell or squamous cell skin cancer Carcinoma in situ of the cervix Adequately treated stage I or II cancer in complete remission HIV negative Not pregnant or nursing Fertile patients must use effective contraception

PRIOR CONCURRENT THERAPY: Biologic therapy: No autologous peripheral stem cell transplantation prior to diagnosis of myelodysplastic syndrome (MDS) or MDS related acute myeloid leukemia Chemotherapy: No prior chemotherapy for MDS or MDS related acute myeloid leukemia except oral chemotherapy to control leukocytosis or thrombocytosis (e.g., hydroxyurea or etoposide) Endocrine therapy: Not specified Radiotherapy: No radiotherapy prior to diagnosis of MDS or MDS related acute myeloid leukemia Surgery: Not specified