DISEASE CHARACTERISTICS: Inclusion criteria: - Diagnosis of acute lymphoblastic leukemia (ALL) or biphenotypic leukemia meeting the following criteria: - Based on European Group for the Classification of Acute Leukemia (EGIL) diagnostic criteria - Newly diagnosed disease - Verified by morphology and confirmed by cytochemistry and immunophenotyping - Trephine biopsy is recommended (unless diagnosis can be confirmed by peripheral blood examination) in the event that bone marrow aspiration results in a "dry tap" - Must have MLL gene rearrangements documented by split-signal fluorescence in situ hybridization and meets 1 of the following risk criteria: - Low-risk disease, defined as all MLL germline cases - Medium-risk disease, defined by 1 of the following criteria: - MLL status unknown - MLL rearranged AND age > 6 months - MLL rearranged AND age < 6 months AND WBC < 300 x 10^9/L AND prednisone good response - High-risk disease, defined by MLL rearrangement AND meets the following criteria: - Age at diagnosis < 6 months (i.e., < 183 days) - WBC ≥ 300 x 10^9/L AND/OR prednisone poor response - Minimum donor and stem cell requirements for high-risk patients undergoing stem cell transplantation: - Donor meeting 1 of the following criteria: - HLA-identical sibling - Very well-matched related or unrelated donor - Must be HLA compatible in 10/10 or 9/10 alleles by 4 digit/allele high-resolution molecular genotyping - Stem cell source - Bone marrow (preferred source) OR peripheral blood stem cells of filgrastim [G-CSF]-stimulated donors OR cord blood - Highly-matched unrelated umbilical cord blood (UCB) (> 7/8 matches identified by high-resolution typing) accepted if a sibling donor is not able to donate bone marrow AND UCB with a sufficient number of nucleated cells (NCs) (i.e., > 1.5 x 10^7/kg recipient body weight [BW]) is cryopreserved - Must have ≥ 3 x 10^8 NCs/kg BW OR 3 x 10^6/kg BW CD34-positive cells available for transplantation - CNS or testicular leukemia at diagnosis allowed Exclusion criteria: - Mature B-ALL, defined by the immunophenotypical presence of surface immunoglobulins or t(8;14) and breakpoint as in B-ALL - Presence of the t(9;22) (q34;q11) or bcr-abl fusion in the leukemic cells (if data are not known, patient still may be eligible) - Relapsed ALL PATIENT CHARACTERISTICS: - See Disease Characteristics PRIOR CONCURRENT THERAPY: - More than 4 weeks since prior systemic corticosteroids - Corticosteroids by aerosol are allowed